<PAGE> 1
SCHEDULE 14A
PRELIMINARY COPY
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) of the Securities
Exchange Act of 1934
(Amendment No. 3)
<TABLE>
<S> <C>
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
</TABLE>
Filing By:
SILICON VALLEY GROUP, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and how it was calculated):
--------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------
[X] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, schedule or registration statement no.:
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(3) Filing party:
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(4) Date filed:
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<PAGE> 2
THE INFORMATION IN THIS PROXY STATEMENT -- PROSPECTUS IS NOT COMPLETE AND
MAY BE CHANGED. WE MAY NOT SELL THE SECURITIES OFFERED BY THIS PROXY
STATEMENT -- PROSPECTUS UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROXY
STATEMENT -- PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND WE
ARE NOT SOLICITING AN OFFER TO BUY THESE SECURITIES, IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
Subject to Completion -- Dated December 22, 2000
PRELIMINARY COPY
[SILICON VALLEY GROUP, INC. LOGO]
101 METRO DRIVE, SUITE 400
SAN JOSE, CALIFORNIA 95110
TO THE STOCKHOLDERS OF SILICON VALLEY GROUP, INC.
A MERGER PROPOSAL -- YOUR VOTE IS VERY IMPORTANT
We invite you to attend a special meeting of the stockholders of Silicon
Valley Group which will be held at 10:00 a.m., Pacific Standard time, on
Wednesday, February 7, 2001, at 2240 Ringwood Avenue San Jose, California 95131.
At this special meeting, you will be asked to vote on a proposal to adopt a
merger agreement that provides for a merger that will result in Silicon Valley
Group becoming an indirect wholly-owned subsidiary of ASM Lithography Holding
N.V., a public limited liability company incorporated in The Netherlands. In the
merger, each share of your Silicon Valley Group common stock will be exchanged
for 1.286 ASM Lithography ordinary shares. ASM Lithography ordinary shares are
quoted on the Nasdaq National Market and on the Official Segment of the stock
market of Euronext Amsterdam N.V. under the trading symbol "ASML." The ASM
Lithography ordinary shares you will receive in the merger will be in the form
of shares of New York registry and quoted on the Nasdaq National Market. On
December 21, 2000, ASM Lithography ordinary shares closed at $21.813 per share
on the Nasdaq National Market.
Approval by the holders of a majority of the outstanding shares of common
stock of Silicon Valley Group and by certain regulatory bodies is necessary
before we can complete the merger. We are furnishing to you the accompanying
proxy statement-prospectus in connection with our solicitation of proxies for
use at the special meeting. This proxy statement-prospectus includes or
incorporates by reference a summary of the terms of the merger agreement,
detailed information concerning ASM Lithography, Silicon Valley Group and the
merger and certain related information. We encourage you to read this entire
document carefully. IN PARTICULAR, YOU SHOULD CAREFULLY CONSIDER THE DISCUSSION
IN THE SECTION ENTITLED "RISK FACTORS" ON PAGE 19 OF THIS PROXY
STATEMENT-PROSPECTUS.
You are also being asked to vote on a proposal to adjourn the special
meeting, if necessary, to solicit additional proxies to adopt the merger
agreement.
AFTER CAREFUL CONSIDERATION, YOUR BOARD OF DIRECTORS BELIEVES THE MERGER TO
BE ADVISABLE AND IN THE BEST INTERESTS OF SILICON VALLEY GROUP AND ITS
STOCKHOLDERS AND HAS, BY UNANIMOUS VOTE OF THE DIRECTORS, APPROVED THE MERGER
AGREEMENT AND RECOMMENDED ITS ADOPTION BY YOU.
YOUR VOTE IS VERY IMPORTANT. Whether or not you plan to attend the special
meeting, please take the time to vote your shares. You may vote your shares by
completing, signing, dating and returning the enclosed proxy card as promptly as
possible in the enclosed postage-paid envelope. Returning the proxy does NOT
deprive you of your right to attend the meeting and to vote your shares in
person. IF YOU DO NOT RETURN YOUR PROXY CARD OR VOTE IN PERSON AT THE SPECIAL
MEETING, THE EFFECT WILL BE THE SAME AS A VOTE AGAINST THE PROPOSAL.
Thank you, and I look forward to seeing you at the special meeting.
PAPKEN S. DER TOROSSIAN
Chairman of the Board and Chief
Executive Officer
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROXY STATEMENT-PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROXY STATEMENT-PROSPECTUS IS DATED DECEMBER 26, 2000 AND IS EXPECTED
TO BE FIRST MAILED TO STOCKHOLDERS ON OR ABOUT DECEMBER 28, 2000.
<PAGE> 3
ADDITIONAL INFORMATION
This proxy statement-prospectus incorporates by reference important
business and financial information about both ASM Lithography and Silicon Valley
Group that is not included in or delivered with this proxy statement-prospectus.
See the section entitled "Where You Can Find More Information" on page 101 for a
list of the information incorporated by reference.
You can obtain any of these documents incorporated by reference in this
document from the Securities and Exchange Commission at the locations listed on
page 102 and, with respect to Silicon Valley Group, through the Securities and
Exchange Commission's web site at http://www.sec.gov. You can also obtain
documents incorporated by reference in this proxy statement-prospectus from ASM
Lithography or Silicon Valley Group without charge by requesting them in writing
or by telephone from the appropriate company at the following addresses and
telephone numbers:
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<CAPTION>
ASM LITHOGRAPHY SILICON VALLEY GROUP
--------------- --------------------
<S> <C>
De Run 1110 101 Metro Drive, Suite 400
5503 LA Veldhoven San Jose, California 95110
The Netherlands Attention: Manager of Investor Relations
Attention: Investor Relations 1-408-467-5870
(+31 40) 268-3938
</TABLE>
IF YOU WOULD LIKE TO REQUEST DOCUMENTS, PLEASE DO SO BY JANUARY 24, 2001 TO
RECEIVE THEM BEFORE THE MEETING. IF YOU REQUEST ANY INCORPORATED DOCUMENTS, WE
WILL MAIL THEM TO YOU BY FIRST-CLASS MAIL, OR ANOTHER EQUALLY PROMPT MEANS,
WITHIN ONE BUSINESS DAY AFTER WE RECEIVE YOUR REQUEST.
<PAGE> 4
[SILICON VALLEY GROUP, INC. LOGO]
101 METRO DRIVE, SUITE 400
SAN JOSE, CALIFORNIA 95110
NOTICE OF SPECIAL MEETING OF SILICON VALLEY GROUP STOCKHOLDERS
WEDNESDAY, FEBRUARY 7, 2001
AT 10:00 A.M. PACIFIC STANDARD TIME
Dear Silicon Valley Group Stockholders:
Notice is hereby given that a special meeting of the stockholders of
Silicon Valley Group, Inc., a Delaware corporation, will be held at 10:00 a.m.,
Pacific Standard time, on Wednesday, February 7, 2001 at 2240 Ringwood Avenue
San Jose, California 95131, for the following purposes:
1. To consider and vote upon a proposal to adopt the Agreement and Plan of
Merger, dated as of October 1, 2000 (the "merger agreement"), by and among ASM
Lithography Holding N.V., a public limited liability company incorporated in The
Netherlands, Silicon Valley Group and others, pursuant to which Silicon Valley
Group will survive the merger as an indirect wholly-owned subsidiary of ASM
Lithography. In the merger, holders of outstanding shares of common stock of
Silicon Valley Group will receive 1.286 ordinary shares of ASM Lithography for
each share of Silicon Valley Group common stock held by them. As a result of the
merger, holders of outstanding shares of Silicon Valley Group series 1 preferred
stock will receive 1.286 ordinary shares of ASM Lithography for each share of
Silicon Valley Group common stock they would have received if each share of
series 1 preferred stock had been converted into Silicon Valley Group common
stock immediately prior to the merger. Adoption of the merger agreement will
also constitute approval of the merger and the other transactions contemplated
by the merger agreement. This item of business is more fully described in the
attached proxy statement-prospectus.
2. To adjourn the meeting, if necessary, to solicit additional proxies to
adopt the merger agreement.
Only holders of record of Silicon Valley Group common stock at the close of
business on December 20, 2000, the record date, are entitled to vote on the
matters listed in this Notice of Special Meeting of Stockholders. You may vote
in person at the Silicon Valley Group special meeting even if you have returned
a proxy. Please do not send in your stock certificates with your proxy card.
By Order of the Board of Directors of
Silicon Valley Group
/s/ LARRY SONSINI
Larry Sonsini
Secretary
San Jose, California
December 26, 2000
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING,
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING PROXY
IN THE ENCLOSED SELF-ADDRESSED STAMPED ENVELOPE.
PLEASE DO NOT SEND YOUR SILICON VALLEY GROUP
COMMON STOCK CERTIFICATES WITH THE ENCLOSED PROXY.
<PAGE> 5
[SVG LOGO]
[ASML LOGO]
PROXY STATEMENT PROSPECTUS
TABLE OF CONTENTS
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SUMMARY OF THE PROXY STATEMENT-PROSPECTUS................... 1
Questions and Answers about the Silicon Valley
Group/ASM Lithography Merger.......................... 2
Summary of the Transaction............................. 3
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA............ 7
Selected Consolidated Historical Financial Data -- ASM
Lithography........................................... 8
Selected Consolidated Historical Financial
Data -- Silicon Valley Group.......................... 12
Selected Unaudited Pro Forma Condensed Combined
Financial Data........................................ 13
Unaudited Comparative Per Share Information............ 14
Comparative Per Share Market Price Data................ 15
Dividend Policy........................................ 16
Recent Developments.................................... 16
THE COMPANIES............................................... 17
RISK FACTORS................................................ 19
Risks Relating to the Merger........................... 19
Risks Following Completion of the Merger............... 21
THE SPECIAL MEETING OF SILICON VALLEY GROUP STOCKHOLDERS.... 29
Proxy Statement-Prospectus............................. 29
Date, Time and Place of the Special Meeting............ 29
Purpose of the Special Meeting......................... 29
Stockholder Record Date for the Special Meeting........ 29
Vote of Silicon Valley Group Stockholders Required for
Adoption of the Merger Agreement...................... 29
Security Ownership of Management....................... 29
Proxies................................................ 30
Adjournments........................................... 30
Revocation............................................. 30
THE MERGER.................................................. 32
Background of the Merger............................... 32
Joint Reasons for the Merger........................... 34
Silicon Valley Group's Reasons for the Merger.......... 34
Recommendation of Silicon Valley Group's Board of
Directors............................................. 36
Opinion of Silicon Valley Group's Financial Advisor.... 37
Interests of Certain Silicon Valley Group Directors,
Officers and Affiliates in the Merger................. 44
Completion and Effectiveness of the Merger............. 47
Structure of the Merger and Conversion of Silicon
Valley Group Common Stock............................. 47
Exchange of Silicon Valley Group Stock Certificates for
ASM Lithography Share Certificates.................... 48
Certain United States Federal Income Tax Consequences
of the Merger......................................... 49
Certain United States Federal Income Tax and The
Netherlands Tax Consequences of Ownership of ASM
Lithography Ordinary Shares........................... 51
Accounting Treatment of the Merger..................... 54
Regulatory and Governmental Approvals.................. 54
Restrictions on Sales of Shares by Affiliates of
Silicon Valley Group and ASM Lithography.............. 55
</TABLE>
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Listing on the Nasdaq National Market and on the
Official Segment of the Stock Market of Euronext
Amsterdam N.V. of ASM Lithography Ordinary Shares to
be Issued in the Merger............................... 56
Dissenters' and Appraisal Rights....................... 56
Delisting and Deregistration of Silicon Valley Group
Common Stock after the Merger......................... 57
Silicon Valley Group's Employee Benefit Plans.......... 57
Treatment of Silicon Valley Group Stock Options and
Other Equity Based Awards............................. 57
Effect of the Merger on Outstanding Series 1 Preferred
Stock of Silicon Valley Group......................... 58
Certain Provisions of the Merger Agreement............. 58
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL
INFORMATION............................................... 65
COMPARISON OF RIGHTS OF ASM LITHOGRAPHY SHAREHOLDERS AND
SILICON VALLEY GROUP STOCKHOLDERS......................... 78
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS, MANAGEMENT AND
DIRECTORS OF SILICON VALLEY GROUP......................... 96
SHARE CERTIFICATES AND TRANSFER............................. 98
LEGAL OPINION............................................... 99
EXPERTS..................................................... 99
GENERAL INFORMATION......................................... 99
STOCKHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING OF SILICON
VALLEY GROUP STOCKHOLDERS IF THE MERGER IS NOT
COMPLETED................................................. 101
WHERE YOU CAN FIND MORE INFORMATION......................... 102
STATEMENTS REGARDING FORWARD-LOOKING INFORMATION............ 105
ENFORCEABILITY OF CIVIL LIABILITIES......................... 106
Annex A -- Agreement and Plan of Merger..................... A-1
Annex B -- Opinion of Credit Suisse First Boston
Corporation............................................... B-1
Annex C -- Section 262 of the Delaware General Corporation
Law....................................................... C-1
</TABLE>
ii
<PAGE> 7
SUMMARY OF THE PROXY STATEMENT-PROSPECTUS
This summary may not contain all of the information that is important to
you. You should carefully read this entire document and the other documents we
refer to for a more complete understanding of the merger. In particular, you
should read the documents attached to this proxy statement-prospectus, including
the merger agreement that is attached as Annex A. In addition, we incorporate by
reference important business and financial information about ASM Lithography and
Silicon Valley Group into this proxy statement-prospectus. You may obtain the
information incorporated by reference into this proxy statement-prospectus
without charge by following the instructions in the section entitled "Where You
Can Find More Information" on page 101 of this proxy statement-prospectus.
THE COMPANIES
(SEE PAGE 17)
SILICON VALLEY GROUP
101 Metro Drive, Suite 400
San Jose, CA 95110
1-408-441-6700
Silicon Valley Group, headquartered in San Jose, California, was founded in
1977 and is a leading supplier of wafer processing equipment for the worldwide
semiconductor industry. The company designs, manufactures, markets and services
technically sophisticated equipment used in the primary stages of semiconductor
manufacturing. Silicon Valley Group's principal product groups focus primarily
on photolithography, photoresist processing, oxidation/diffusion, low pressure
chemical vapor deposition and atmospheric pressure chemical vapor deposition.
ASM LITHOGRAPHY
De Run 1110
5503 LA Veldhoven
The Netherlands
(+31 40) 268-3000
ASM Lithography, headquartered in Veldhoven, The Netherlands, was founded
in 1984 to bring advanced microlithography systems to the global semiconductor
industry. ASM Lithography develops, manufactures, markets and services advanced
photolithography projection systems that are essential to the fabrication of
modern integrated circuits. ASM Lithography supplies its products to integrated
circuit manufacturers, worldwide, that use them to produce semiconductors. ASM
Lithography also provides a full range of support, from advanced process and
product applications knowledge to complete round-the-clock service with uptime
performance guarantees.
1
<PAGE> 8
QUESTIONS AND ANSWERS ABOUT THE SILICON VALLEY GROUP/ASM LITHOGRAPHY MERGER
Q: WHY ARE WE PROPOSING TO MERGE?
A: We believe that the merger of ASM Lithography and Silicon Valley Group
represents a compelling opportunity to enhance value for both ASM
Lithography shareholders and Silicon Valley Group stockholders. The merger
will create the number one provider of photolithography equipment to the
worldwide semiconductor industry and will combine ASM Lithography's leading
edge volume production with Silicon Valley Group's early introduction
capabilities. The merger will also result in a combined corporation with
greater resources to pursue research and development efforts to accelerate
development of next generation technology. Additionally, the merger will
increase selling opportunities for our businesses.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: If the merger is completed, you will receive 1.286 ASM Lithography ordinary
shares for each share of Silicon Valley Group common stock that you own. ASM
Lithography will not issue fractional shares; you will receive cash based on
the market price on the Nasdaq National Market of ASM Lithography ordinary
shares instead of any fractional shares.
Q: WILL THE NUMBER OF ASM LITHOGRAPHY ORDINARY SHARES TO BE ISSUED BE ADJUSTED
IF THE VALUE OF ASM LITHOGRAPHY ORDINARY SHARES
CHANGES?
A: No. The number of ASM Lithography ordinary shares to be issued for each
share of Silicon Valley Group common stock is fixed and will not be adjusted
based upon changes in the value of these shares. As a result, the value of
the shares you receive in the merger will not be known at the time you vote
on the merger and will increase or decrease with the market price of ASM
Lithography ordinary shares. Since September 29, 2000, the last trading day
before the merger was publicly announced, through December 21, 2000, the
value of the ASM Lithography ordinary shares to be received for each
outstanding share of Silicon Valley Group common stock in the merger has
decreased from $41.55 to $28.05, a decrease of approximately 32.5%.
Q: HOW MANY ORDINARY SHARES OF ASM LITHOGRAPHY WILL SILICON VALLEY GROUP
STOCKHOLDERS OWN AFTER THE MERGER?
A: Based on the number of Silicon Valley Group and ASM Lithography shares
outstanding as of December 20, 2000, immediately following the merger, the
former stockholders of Silicon Valley Group will own approximately 10% of
ASM Lithography.
Q: WHAT DO I NEED TO DO NOW?
A: After carefully reading and considering the information contained in this
document, please fill out, date, sign and return your proxy card. Then mail
your signed proxy card in the enclosed postage-prepaid return envelope as
soon as possible so that your shares may be represented at the special
meeting. You may also vote by Internet or by telephone as described on page
30.
Q: WHEN MAY I SELL THE ORDINARY SHARES OF ASM LITHOGRAPHY THAT I RECEIVE IN THE
MERGER?
A: The ASM Lithography ordinary shares received by you in the merger will be
freely transferable unless you are an "affiliate" of either ASM Lithography
or Silicon Valley Group. Generally, an "affiliate" is considered to be
someone who is an executive officer or director of a company or someone who
owns more than 10% of the outstanding stock of a company and has the ability
to direct control of the company.
Q: WHEN WILL THE MERGER BE COMPLETED?
A: We expect to complete the merger early in 2001. Because the merger is
subject to the approval of Silicon Valley Group's stockholders, as well as
the receipt of governmental approvals and the satisfaction of certain other
conditions, we cannot predict the exact timing of its completion.
2
<PAGE> 9
SUMMARY OF THE TRANSACTION
STRUCTURE OF THE MERGER AND CONVERSION OF SILICON VALLEY GROUP COMMON STOCK
(SEE PAGE 47)
Silicon Valley Group will merge with an indirect subsidiary of ASM
Lithography and become an indirect wholly-owned subsidiary of ASM Lithography.
In the merger, you will receive 1.286 ASM Lithography ordinary shares for each
share of Silicon Valley Group common stock that you own. Following the merger,
as a shareholder of ASM Lithography, you will have an equity stake in ASM
Lithography.
STOCKHOLDER APPROVAL
(SEE PAGE 29)
The holders of a majority of the outstanding shares of Silicon Valley Group
common stock must adopt the merger agreement. ASM Lithography shareholders are
not required to adopt the merger agreement and will not vote on the merger.
RECOMMENDATION OF SILICON VALLEY GROUP'S BOARD OF DIRECTORS
(SEE PAGE 36)
After careful consideration, Silicon Valley Group's board of directors
believes the merger to be advisable and in the best interests of Silicon Valley
Group and its stockholders and has, by unanimous vote of the directors, approved
the merger agreement and recommended its adoption by you.
OPINION OF SILICON VALLEY GROUP'S FINANCIAL ADVISOR
(SEE PAGE 37)
Silicon Valley Group's financial advisor, Credit Suisse First Boston
Corporation, has delivered a written opinion to the Silicon Valley Group board
of directors as to the fairness, from a financial point of view, to the holders
of Silicon Valley Group common stock, of the exchange ratio provided for in the
merger. It should be understood that Credit Suisse First Boston's opinion, dated
October 1, 2000, to the board of directors speaks as of that date and that
Credit Suisse First Boston does not have any obligation to update, revise or
reaffirm its opinion, including at the time of the special meeting of the
stockholders. The full text of Credit Suisse First Boston's written opinion is
attached to this proxy statement-prospectus as Annex B. We encourage you to read
this opinion carefully in its entirety for a description of the procedures
followed, assumptions made, matters considered and limitations on the review
undertaken. CREDIT SUISSE FIRST BOSTON'S OPINION IS DIRECTED TO THE SILICON
VALLEY GROUP BOARD OF DIRECTORS AND DOES NOT CONSTITUTE A RECOMMENDATION TO YOU
AS TO ANY MATTER RELATING TO THE MERGER.
THE SPECIAL MEETING OF SILICON VALLEY GROUP STOCKHOLDERS
(SEE PAGE 29)
A special meeting of the stockholders of Silicon Valley Group will be held
at 10:00 a.m., Pacific Standard time, on Wednesday, February 7, 2001 at 2240
Ringwood Avenue San Jose, California 95131, to consider and adopt the merger
agreement. You are entitled to vote at the special meeting if you owned shares
of Silicon Valley Group common stock at the close of business on December 20,
2000, which is the record date for the special meeting. You will have one vote
for each share of Silicon Valley Group common stock you owned at the close of
business on the record date.
PROCEDURE FOR CASTING YOUR VOTE
(SEE PAGE 30)
Please mail your signed proxy card in the enclosed return envelope as soon
as possible so that your shares of Silicon Valley Group common stock may be
represented at the special meeting. If you do not include instructions on how to
vote your properly executed proxy, your shares will be voted FOR adoption of the
merger agreement.
PROCEDURE FOR CASTING YOUR VOTE IF YOUR SHARES ARE HELD BY YOUR BROKER IN STREET
NAME
(SEE PAGE 30)
Your broker will vote your shares only if you provide instructions on how
to vote by following the information provided to you by your broker. If you do
not provide your broker with voting instructions, your shares will not be voted
at the Silicon Valley Group special meeting and it will
3
<PAGE> 10
have the same effect as voting AGAINST adoption of the merger agreement.
PROCEDURE FOR CHANGING YOUR VOTE
(SEE PAGE 31)
You may change your vote at any time before it is voted by granting a
subsequent proxy or by attending and voting at the special meeting in person.
You may also revoke your proxy by sending written notice of revocation to the
Secretary of Silicon Valley Group prior to the time it is voted.
PROCEDURE FOR EXCHANGING YOUR STOCK CERTIFICATES/DO NOT SEND YOUR STOCK
CERTIFICATES NOW
(SEE PAGE 48)
After the merger is completed, we will send you written instructions for
exchanging your Silicon Valley Group stock certificates for ASM Lithography
share certificates. Do not send your Silicon Valley Group stock certificates
now.
CONDITIONS TO COMPLETION OF THE MERGER
(SEE PAGE 59)
Our respective obligations to complete the merger are subject to the prior
satisfaction or waiver of certain conditions described on pages 59-61 of this
proxy statement-prospectus. These conditions include, among others:
- the merger agreement must be adopted by Silicon Valley Group stockholders
- no injunction or order preventing the completion of the merger may be in
effect
- requisite approvals and waiting periods under applicable antitrust laws
must be obtained or have expired
- we must each receive an opinion of tax counsel to the effect that the
merger will qualify as a tax-free reorganization
- ASM Lithography's registration statement allowing ASM Lithography to
issue its ordinary shares in the merger being declared effective by the
SEC
- ASM Lithography must be advised by Deloitte & Touche Accountants, its
independent auditors, and Deloitte & Touche LLP, the independent auditors
of Silicon Valley Group, that it is appropriate for the merger to be
accounted for as a "pooling of interests" business combination
Although certain of these conditions may be waived, neither ASM Lithography
or Silicon Valley Group presently intends to waive any of the conditions. Prior
to waiving the conditions relating to the merger qualifying as a tax free
reorganization, Silicon Valley Group will resolicit proxies from its
stockholders. Prior to waiving any other condition to its obligation to complete
the merger, Silicon Valley Group will consider the facts and circumstances at
that time and make a determination as to whether a resolicitation of proxies
from Silicon Valley Group stockholders is appropriate.
TERMINATION OF THE MERGER AGREEMENT
(SEE PAGE 62)
Silicon Valley Group and ASM Lithography may jointly agree to terminate the
merger agreement at any time before the merger is completed. In addition, either
company may terminate the merger agreement if:
- the merger is not completed by June 30, 2001
- a law or order is issued or enacted by a governmental authority that
prohibits the merger
- Silicon Valley Group's stockholders do not adopt the merger agreement at
the special meeting
- the conditions to completion of the merger would not be satisfied because
of a material breach of a representation, warranty or agreement in the
merger agreement by the other company
The merger agreement may also be terminated by ASM Lithography if Silicon
Valley Group's board of directors:
- withdraws, adversely modifies or changes its recommendation in favor of
the merger agreement
- recommends any extraordinary transaction of the nature specified in the
merger agreement, such as a merger or a sale of significant assets,
involving Silicon Valley Group and a party other than ASM Lithography
4
<PAGE> 11
- fails to recommend that the stockholders of Silicon Valley Group reject
an offer by any party other than ASM Lithography to acquire more than 15%
of the Silicon Valley Group common stock
PAYMENT OF TERMINATION FEE
(SEE PAGE 63)
Silicon Valley Group has agreed to pay ASM Lithography a termination fee of
$47,000,000 if the merger agreement is terminated under the circumstances
described on page 63 of this proxy statement-prospectus.
SILICON VALLEY GROUP OFFICERS AND DIRECTORS HAVE CONFLICTS OF INTEREST THAT MAY
INFLUENCE THEM TO SUPPORT OR APPROVE THE MERGER
(SEE PAGE 44)
The directors and officers of Silicon Valley Group participate in
arrangements that provide them with interests in the merger that are different
from, or are in addition to, yours.
In particular, Silicon Valley Group has existing employment agreements with
Messrs. Papken S. Der Torossian, its Chairman and Chief Executive Officer,
William A. Hightower, its President and Chief Operating Officer, Russell G.
Weinstock, its Vice President and Chief Financial Officer, Boris Lipkin, its
Corporate Vice President, Jeffrey Kowalski, President of its Thermal Systems
division, John Shamaly, President of its Lithography division, Steven Jenson,
its Vice President of Worldwide Sales and Service, which provide for certain
payments, acceleration of options and benefits if their employment is terminated
under certain circumstances following a change in control. Messrs. Torossian,
Hightower and Weinstock have agreed to forego the cash payments that these
executives are entitled to receive under their employment agreement if they are
terminated following a change in control in partial consideration for the cash
payments they are entitled to receive under the severance and consulting
agreements discussed below. Messrs. Lipkin, Kowalski, Shamaly and Jenson will
receive payments in the aggregate of $1,838,120, $487,800 and $484,800 and
$545,800, respectively, in the event that their employment is terminated under
certain circumstances following a change of control.
In connection with the merger, Silicon Valley Group has entered into
separation and consulting agreements with each of Messrs. Der Torossian,
Hightower and Weinstock. These separation and consulting agreements compensate
these executives for acting as consultants for, and assisting in the integration
of Silicon Valley Group into ASM Lithography, agreeing to refrain from competing
with ASM Lithography in certain lines of business and agreeing to forego certain
cash payments that these executives are entitled to receive under the employment
agreements described above. Under these consulting agreements, Messrs. Der
Torossian, Hightower and Weinstock will receive payments in the aggregate of
$12,283,850, $5,917,120 and $2,869,780, respectively.
As a result, these directors and officers could be more likely to vote to
approve the merger agreement than if they did not hold these interests. Silicon
Valley Group stockholders should consider whether these interests may have
influenced these directors and officers to support or recommend the merger.
As of the record date, directors and executive officers of Silicon Valley
Group and their affiliates beneficially owned approximately 5.29% of the
outstanding shares of Silicon Valley Group common stock.
For a discussion of these agreements, see INTERESTS OF CERTAIN SILICON
VALLEY GROUP DIRECTORS, OFFICERS AND AFFILIATES IN THE MERGER on pages 44-47 of
this proxy statement-prospectus.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
(SEE PAGE 49)
We have structured the merger so that, in general, neither ASM Lithography,
Silicon Valley Group nor their respective shareholders will recognize gain or
loss for United States federal income tax purposes in the merger, except for
taxes payable as a result of cash received by Silicon Valley Group stockholders
in lieu of fractional shares. It is a condition to the merger that we receive
legal opinions to this effect. At the present time, ASM Lithography and Silicon
Valley Group do not plan to waive this condition. Silicon Valley Group will
resolicit proxies from its stockholders if it subsequently decides to waive this
condition.
5
<PAGE> 12
TAX MATTERS ARE VERY COMPLICATED. THE TAX CONSEQUENCES OF THE MERGER TO YOU
WILL DEPEND ON THE FACTS OF YOUR OWN SITUATION. YOU SHOULD CONSULT YOUR OWN TAX
ADVISORS FOR A FULL UNDERSTANDING OF THE TAX CONSEQUENCES OF THE MERGER TO YOU.
ACCOUNTING TREATMENT OF THE MERGER
(SEE PAGE 54)
We intend to account for the merger as a "pooling of interests" business
combination. It is a condition to completion of the merger that ASM Lithography
be advised in writing by Deloitte & Touche Accountants, its independent
auditors, and Deloitte & Touche LLP, the independent auditors of Silicon Valley
Group, that it is appropriate for the merger to be accounted for as a "pooling
of interests" business combination. At the present time, ASM Lithography does
not plan to waive this condition. However, if ASM Lithography subsequently
decides to waive this condition, the merger may be completed without
resoliciting proxies from Silicon Valley Group's stockholders because Silicon
Valley Group's obligation to complete the merger is not conditioned on the
merger being accounted for as a "pooling of interests" business combination.
Under the "pooling of interests" method of accounting, each of our historical
recorded assets and liabilities will be carried forward to the combined company
at their recorded amounts. In addition, the operating results of the combined
company will include each of our operating results for the entire fiscal year in
which the merger is completed and our historical reported operating results for
prior periods will be combined and restated as the operating results of the
combined company.
REGULATORY AND GOVERNMENTAL APPROVALS
(SEE PAGE 54)
All requisite pre-closing approvals or waiting periods under United States
and foreign competition and antitrust laws applicable to the merger have been
obtained or expired. However, the merger may be challenged on antitrust grounds
either before or after the completion of the merger. In addition, the merger
remains subject to approval by the Committee on Foreign Investment in the United
States under the Exon-Florio amendment to the Omnibus Trade and Competitiveness
Act of 1988. The parties submitted a voluntary notice under the Exon-Florio
amendment on December 13, 2000 requesting confirmation that the merger and the
other transactions contemplated by the merger agreement do not raise concerns
under the Exon-Florio amendment. Any determination that an investigation is
called for under the Exon-Florio amendment must be made within 30 days of the
voluntary notice.
DISSENTERS' AND APPRAISAL RIGHTS
(SEE PAGE 56)
Under Delaware law, holders of Silicon Valley Group common stock are not
entitled to dissenters' or appraisal rights in the merger. Holders of Silicon
Valley Group's series 1 preferred stock are entitled to appraisal rights. See
the section entitled DISSENTERS' AND APPRAISAL RIGHTS on page 56 of this proxy
statement-prospectus.
WHERE YOU CAN FIND MORE INFORMATION
(SEE PAGE 101)
If you have any questions about the merger, please call Silicon Valley
Group's Investor Relations at 1-408-467-5870. You may also call ASM Lithography
Investor Relations at (+31 40) 268-3938.
6
<PAGE> 13
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
The following tables present (1) selected historical financial data of ASM
Lithography, (2) selected historical financial data of Silicon Valley Group and
(3) selected unaudited pro forma combined financial data of ASM Lithography and
Silicon Valley Group, which reflect the proposed transaction and assume the
pooling of interests method of accounting.
The selected financial data of ASM Lithography has been derived from the
audited historical consolidated financial statements and related notes of ASM
Lithography, which have been audited by Deloitte & Touche Accountants,
independent auditors, for each of the years in the five-year period ended
December 31, 1999 and the unaudited consolidated financial statements for the
six months ended June 30, 1999 and June 30, 2000. The selected financial data of
Silicon Valley Group has been derived from the audited historical consolidated
financial statements and related notes of Silicon Valley Group, which have been
audited by Deloitte & Touche LLP, independent auditors, for each of the years in
the five-year period ended September 30, 1999 and the unaudited consolidated
financial statements for the nine months ended June 30, 1999 and June 30, 2000.
The historical information is only a summary and you should read it in
conjunction with the historical financial statements and related notes contained
in the annual and quarterly reports for Silicon Valley Group and the annual and
semiannual reports for ASM Lithography which have been incorporated by reference
into this proxy statement-prospectus. The selected unaudited pro forma combined
financial data has been derived from the unaudited pro forma condensed combined
financial information included elsewhere in this proxy statement-prospectus and
should be read in conjunction with the unaudited pro forma condensed combined
financial information and related notes. This unaudited pro forma condensed
consolidated financial information is provided for illustrative purposes only
and does not show what the results of operations and financial position of ASM
Lithography would have been if the merger had actually occurred on the dates
assumed. This information also does not indicate what ASM Lithography's future
operating results or consolidated financial position will be.
7
<PAGE> 14
ASM LITHOGRAPHY
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA(1)(2)
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,
------------------------------------------------- ---------------------------
(UNAUDITED)
1995 1996 1997 1998 1999 1999 1999 2000 2000
----- ----- ----- ----- ------- ------- ------- ------- -------
U.S. U.S.
DOLLARS DOLLARS
EUROS EUROS EUROS EUROS EUROS (3) EUROS EUROS (3)
----- ----- ----- ----- ------- ------- ------- ------- -------
(IN MILLIONS, EXCEPT PER SHARE DATA, NUMBER OF EMPLOYEES AND AS OTHERWISE
NOTED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Net sales............................ 416.4 604.2 818.0 779.2 1,197.5 1,039.7 407.9 971.7 843.6
Cost of sales(4)..................... 264.1 361.6 474.3 481.6 798.0 692.9 293.8 582.1 505.4
----- ----- ----- ----- ------- ------- ------- ------- -------
Gross Profit(4).................... 152.4 242.6 343.7 297.6 399.5 346.8 114.1 389.6 338.2
Research and development costs(4).... 38.7 56.8 93.1 144.7 174.0 151.0 75.9 111.1 96.5
Research and development credits..... (6.9) (3.7) (13.6) (30.0) (36.1) (31.4) (23.1) (7.9) (6.9)
Selling, general and administrative
expenses........................... 25.8 37.2 57.6 94.2 140.2 121.7 57.7 79.7 69.2
----- ----- ----- ----- ------- ------- ------- ------- -------
Operating income................... 94.8 152.4 206.6 88.7 121.4 105.4 3.5 206.7 179.4
Gain on sale of marketable
securities......................... -- -- (14.1) -- -- -- -- -- --
Interest (income) expense, net....... 0.4 0.2 (0.7) (1.2) 3.2 2.7 0.7 0.5 0.4
----- ----- ----- ----- ------- ------- ------- ------- -------
Income before income taxes......... 94.4 152.2 221.4 89.9 118.3 102.7 2.9 206.2 179.0
Income taxes......................... 34.8 53.4 72.1 27.9 37.5 32.6 (0.6) 61.8 53.6
----- ----- ----- ----- ------- ------- ------- ------- -------
Net income......................... 59.6 98.8 149.3 62.0 80.8 70.1 3.5 144.4 125.4
Net income per share -- basic(5)... 0.15 0.24 0.36 0.15 0.19 0.17 0.01 0.35 0.30
Net income per
share -- diluted(5).............. 0.15 0.24 0.36 0.15 0.19 0.17 0.01 0.33 0.28
CONSOLIDATED BALANCE SHEET DATA:
Working capital...................... 113.4 227.5 368.2 626.1 1,162.3 1,009.1 641.6 1,454.6 1,262.9
Total assets......................... 299.1 487.0 664.0 937.8 1,703.5 1,479.0 1,004.4 2,120.5 1,841.0
Long-term debt and capital leases.... 7.5 -- -- 272.3 789.0 685.0 272.3 814.4 707.1
Stockholders' equity................. 137.8 292.3 437.6 500.2 611.3 530.7 508.7 771.3 669.6
RATIOS AND OTHER DATA:
Gross margin (before repayment of
TOKs)(4)........................... 40.5% 43.2% 42.0% 38.2% 33.4% 33.4% 28.0% 40.1% 40.1%
Gross margin (including repayment of
TOKs)(4)........................... 36.6% 40.1% 42.0% 38.2% 33.4% 33.4% 28.0% 40.1% 40.1%
Operating margin..................... 22.8% 25.2% 25.3% 11.4% 10.1% 10.1% 0.9% 21.3% 21.3%
Capital expenditures................. 20.7 36.8 41.4 98.6 126.8 110.1 40.8 36.8 32.1
Depreciation and amortization........ 6.0 9.2 16.1 34.0 42.5 36.9 48.1 32.2 28.1
Sales of photolithography systems (in
units)(6).......................... 177 205 211 162 217 80 169
Number of employees at the end of
period(7).......................... 1,123 1,423 2,019 2,364 2,984 2,586 3,717
</TABLE>
(1) The summary consolidated financial data set forth above should be read in
conjunction with Management's Discussion and Analysis of Financial Condition and
Results of Operations and ASM Lithography's Audited Financial Statements and the
Notes to its Audited Consolidated Financial Statements in its 1999 Annual Report
on Form 20-F, incorporated herein by reference. Amounts presented above may not
sum due to rounding.
(2) Effective for the fiscal year 1999, ASM Lithography changed its reporting
currency from Dutch guilders to euros. Prior year balances have been restated
based on the fixed exchange rate of Euro 1.00 to NLG 2.20371 as of January 1,
1999. The comparative balances reported in euros depict the same trends as would
have been presented if ASM Lithography had continued to present balances in
Dutch guilders.
(3) Solely for the convenience of the reader, certain amounts presented for the
year ended 1999 and for the six months ended June 30, 2000 have been translated
into United States dollars using the exchange rate in effect on October 10, 2000
of $1.00 = Euro 1.1518.
8
<PAGE> 15
(4) ASM Lithography applies for and receives subsidies and credits for research
and development from various governmental sources, which it records as research
and development credits in the periods when they are claimed. Certain technical
development credits (Technische Ontwikkelingskredieten or "TOK") provided for by
the Government of The Netherlands to offset the cost of certain research and
development projects are contingently repayable if and when the sales of
equipment developed in such projects occur. These repayments are calculated as a
percentage of sales revenue and charged to cost of sales for the related product
in the period when the sales are made. The outstanding TOK balance was Euro 1.8
million, zero, Euro 3.5 million, Euro 13.0 million and Euro 35.0 million at
December 31, 1995, 1996, 1997, 1998 and 1999, respectively. TOK balances at June
30, 1999 and 2000 were Euro 13.0 million and Euro 35.0 million, respectively.
(5) All the net income per ordinary share amounts have been retroactively
adjusted to reflect the two-for-one stock splits in May 1997 and May 1998 and
the three-for-one stock split in April 2000.
(6) In 1995, 1996, 1997, 1998 and 1999, 23 units, 6 units, 11 units, 7 units and
22 units, respectively, were pre-owned wafer steppers reacquired from existing
customers and then immediately resold. During the first half of 1999 and 2000,
11 units and 18 units, respectively, were pre-owned wafer steppers reacquired
and resold.
(7) The number of employees presented includes 219, 228, 391, 285, 350, 300 and
473 contract employees at December 31, 1995, 1996, 1997, 1998 and 1999 and June
30, 1999 and 2000, respectively.
The following notes supplement ASM Lithography's semiannual financial
statements that are incorporated by reference into this proxy
statement-prospectus.
(A) Summary of Significant Accounting Policies
The accompanying condensed unaudited interim financial statements have been
prepared in accordance with United States generally accepted accounting
principles. The interim financial statements are unaudited but include all
adjustments (consisting of normal recurring adjustments) which ASM Lithography's
management considers necessary for a fair presentation of the financial position
as of such dates and the operating results and cash flows for those periods.
New Accounting Pronouncements. In December 1999, the Securities and
Exchange Commission issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition in Financial Statements" ("SAB 101"), that provides guidance on the
recognition, presentation and disclosure of revenue in financial statements
filed with the SEC. In June 2000, the SEC issued SAB 101B, "Second Amendment:
Revenue Recognition in Financial Statements" ("SAB 101B"). SAB 101B delays the
implementation of SAB 101 until no later than the fourth quarter of fiscal years
beginning after December 15, 1999. Under the guidance set forth in SAB 101, ASM
Lithography will change its revenue recognition policy on December 31, 2000,
with a cumulative effect adjustment as of January 1, 2000. Based on its sales
contracts, its product acceptance procedures and its proven history of
installation of photolithography systems, in most cases, ASM Lithography will
continue to recognize revenue upon shipment of its products, rather than upon
completion of installation, because the installation process is not believed to
be essential to the functionality of its products. However, since under most of
ASM Lithography's sales contracts, the timing of payment of a portion of the
sales price is coincident with installation, such installation is not considered
to be inconsequential or perfunctory under the guidance of SAB 101. ASM
Lithography believes it has an enforceable claim for that portion of the sales
price not related to the fair value of the installation should it not fulfill
the installation obligation in those cases where installation is not essential
to the functionality of the equipment. Therefore, the change in revenue
recognition policy will result in ASM Lithography deferring the fair value of
the installation service yet to be performed on delivered equipment. The fair
value of in-progress installation will be measured based upon the per-hour
amount that ASM Lithography charges for similar services, as well as on amounts
charged by third parties for installation services. Upon adoption of SAB 101,
revenue will be deferred on initial shipments of new products based on new
technologies until after customer acceptance. ASM Lithography is currently
evaluating the status of all installations that are expected to be in progress
as of December 31, 2000, as
9
<PAGE> 16
well as those installations that were in progress as of December 31, 1999.
However, ASM Lithography has not completed this evaluation, and therefore has
not yet determined the effect this change will have on its results of
operations, financial position and cash flows.
(B) Inventories.
<TABLE>
<CAPTION>
(AMOUNTS IN THOUSANDS OF EUROS) DECEMBER 31, 1999 JUNE 30, 2000
------------------------------- ----------------- -------------
<S> <C> <C>
Raw materials............................................... 163,575 163,705
Work-in-process............................................. 122,740 211,182
Finished products........................................... 131,209 127,307
Allowance for obsolescence.................................. (41,665) (45,543)
------- -------
TOTAL INVENTORIES, NET...................................... 375,859 456,651
</TABLE>
(C) Major Customers and Geographical Information.
The following table presents sales to specific customers for each of the half
years 1999 and 2000, that exceeded 10 percent of the total net sales in such
half year:
<TABLE>
<CAPTION>
HALF YEAR ENDED JUNE 30, 1999 2000
------------------------ ------- -------
(AMOUNTS IN THOUSANDS OF EUROS)
<S> <C> <C>
Customer:
A........................................................... 28,463 195,179
B........................................................... 110,088 102,560
</TABLE>
The following table summarizes net sales, operating income and identifiable
assets of ASM Lithography's operation in The Netherlands, The United States and
Asia, the significant geographic areas in which ASM Lithography operates. On
December 31, 1998, Royal Philips Electronics N.V., known as Philips, owned 23.9%
of ASM Lithography's ordinary shares. Philips reduced its holdings to 7.2%
through a public offering completed on June 21, 2000.
<TABLE>
<CAPTION>
HALF YEAR ENDED
JUNE 30, 1999
(AMOUNTS IN THOUSANDS
OF EUROS)
---------------------
ASIA NETHERLANDS UNITED STATES ELIMINATIONS CONSOLIDATED
------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales to unaffiliated customers........ 196,834 30,694 162,606 -- 390,134
Net sales to Philips....................... -- 7,808 9,941 -- 17,748
Intra-area sales........................... -- 316,503 -- (316,503) --
------- --------- ------- -------- -------
Total net sales............................ 196,834 355,005 172,547 (316,503) 407,883
Operating income........................... 13,191 (2,843) (7,260) 455 3,543
Identifiable assets........................ 1,314 1,406,967 101,380 (612,461) 897,200
</TABLE>
<TABLE>
<CAPTION>
{HALF YEAR ENDED
JUNE 30, 2000
(AMOUNTS IN THOUSANDS
OF EUROS)
---------------------
ASIA NETHERLANDS UNITED STATES ELIMINATIONS CONSOLIDATED
------- ----------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales to unaffiliated customers........ 545,357 71,685 316,146 -- 933,188
Net sales to Philips....................... -- 30,873 7,640 -- 38,513
Intra-area sales........................... -- 781,562 -- (781,562) --
------- --------- ------- -------- ---------
Total net sales............................ 545,357 884,120 323,786 (781,562) 971,701
Operating income........................... 64,512 134,036 7,660 464 206,672
Identifiable assets........................ 303,094 2,360,446 205,927 (784,489) 2,084,978
</TABLE>
(D) Contingencies. ASM Lithography is not currently a party to any lawsuits
that it believes will have an adverse effect on its future operating results or
financial position. However, from time to time certain of ASM Lithography's
customers have received notices of infringement alleging that the manufacture of
semiconductor products and/or the equipment used to manufacture semiconductor
products infringes certain patents. ASM Lithography has been advised that it
could be obligated to pay damages to customers if use of ASM Lithography's
systems by those customers were found to infringe any valid patents issued to
third parties. If these claims were successful, ASM Lithography could be
required to indemnify its customers for some or all of any losses incurred as a
result of that infringement. In addition, management is not aware of any other
matters that could give rise to any material liabilities to ASM Lithography for
patent infringement claims.
(E) Earnings Per Share. Basic net income per share is computed by dividing net
income by the weighted average ordinary shares outstanding. Diluted net income
per share reflects the potential dilution
10
<PAGE> 17
that could occur if options issued under ASM Lithography's share compensation
plan were exercised. Certain antidilutive options were excluded from the diluted
net income per share calculations. The computation of diluted earnings per share
did not assume conversion of convertible bonds, as such conversion would have
had an antidilutive effect on earnings per share.
(F) During the six months ended June 30, 2000, ASM Lithography entered into a
cash management arrangement with Morgan Stanley & Company International Ltd.
("MSIL"), a subsidiary of Morgan Stanley Dean Witter ("MSDW"). Under the cash
management agreement, ASM Lithography invested $400 million and MSIL invested
$108 million in a separate legal entity. ASM Lithography controls the entity
through a contractual agreement. Further, ASM Lithography owns 80% of the
entity, and can require its dissolution at any time, which would result in the
repayment of its investment. The total amount of $508 million of funds
contributed to the entity has been invested as follows: $200 million in deposits
at Dutch banks, and $308 million in a reverse repurchase arrangement transaction
with MSIL. At June 30, 2000, the balance of the investment under the reverse
repurchase arrangement was approximately $310 million. The investment return on
the reverse repurchase agreement is LIBOR less a certain number of basis points.
Under the reverse repurchase agreement, ASM Lithography purchases underlying
investment grade securities from MSIL, and resells the securities back to MSIL
every ninety days. ASM Lithography takes possession of the underlying
securities, which are maintained at a fair value approximating 102% of the funds
invested, to protect against the unlikely event of a default by MSIL. In
addition, the reverse repurchase arrangement is guaranteed by MSDW.
(G) Consolidated Statements of Shareholders' Equity
<TABLE>
<CAPTION>
AS OF JUNE 30 1998 1999 2000 2000
(AMOUNTS IN THOUSANDS, EXCEPT SHARES AND PER SHARE DATA) EUR(2) EUR(2) EUR USD(1)
-------------------------------------------------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
PRIORITY SHARES:
Balance, as of June 30...................................... 1 1 1 1
ORDINARY SHARES:
Balance, beginning of year.................................. 7,828 8,154 8,211 7,846
Issuance of ordinary shares................................. 322 25 21 20
------- ------- ------- -------
Balance, end of period...................................... 8,150 8,179 8,232 7,866
SHARE PREMIUM:
Balance, beginning of year.................................. 116,927 118,431 149,983 143,319
Issuance of ordinary shares................................. 1,274 19,607 15,392 14,729
------- ------- ------- -------
Balance, end of period...................................... 118,201 138,038 165,375 158,048
RETAINED EARNINGS:
Balance, beginning of year.................................. 310,771 372,771 453,521 433,369
Net income.................................................. 63,530 3,517 144,441 138,029
------- ------- ------- -------
Balance, end of period...................................... 374,301 376,288 597,962 571,398
DEFERRED COMPENSATION EXPENSE:
Balance, beginning of year.................................. 0 0 0 0
Management share compensation............................... 0 0 0 0
------- ------- ------- -------
Balance, end of period...................................... 0 0 0 0
COMPREHENSIVE INCOME:
NET UNREALIZED INVESTMENT GAINS:
Balance, beginning of year.................................. 0 0 0 0
Change in net unrealized investment gains................... 0 0 0 0
------- ------- ------- -------
Balance, end of period...................................... 0 0 0 0
CUMULATIVE TRANSLATION ADJUSTMENTS:
Balance, beginning of year.................................. 2,111 856 (464) (443)
Exchange rate changes for the period........................ 260 (5,816) 190 181
------- ------- ------- -------
Balance, end of period...................................... 2,371 (4,960) (274) (262)
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Balance, beginning of year.................................. 2,111 856 (464) (443)
Changes for the period...................................... 260 (5,816) 190 181
------- ------- ------- -------
Balance, end of period...................................... 2,371 (4,960) (274) (262)
NUMBER OF ORDINARY SHARES OUTSTANDING (IN THOUSANDS):
Number of ordinary shares beginning of year................. 414,000 414,651 417,546
Issuance of ordinary shares................................. 433 1,253 1,091
------- ------- ------- -------
Number of ordinary shares outstanding, end of year.......... 414,433 415,904 418,637
</TABLE>
---------------
(1) Solely for the convenience of the reader, EUR amounts have been translated,
solely for the convenience of the reader, at the rate of USD 1.00 to EUR
1.0465.
(2) Prior year balances were restated from guilders into euros using the fixed
exchange rate as of January 1st 1999 (EUR 1.00 = NLG 2.20371). See Note 1 to
the Consolidated Financial Statements.
11
<PAGE> 18
SILICON VALLEY GROUP
SELECTED CONSOLIDATED HISTORICAL FINANCIAL DATA(1)
<TABLE>
<CAPTION>
NINE MONTHS
YEARS ENDED SEPTEMBER 30, ENDED JUNE 30,
--------------------------------------------------------- ---------------------
(UNAUDITED)
1995 1996 1997 1998 1999 1999 2000
--------- --------- --------- --------- --------- --------- ---------
IN UNITED STATES DOLLARS
---------------------------------------------------------------------------------
(IN MILLIONS, EXCEPT PER SHARE DATA, NUMBER OF EMPLOYEES AND AS OTHERWISE NOTED)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net sales............................... $475.1 $657.3 $614.2 $608.6 $473.7 $283.9 $602.4
Cost of sales........................... 287.6 383.7 378.1 408.4 312.3 197.8 340.1
------ ------ ------ ------ ------ ------ ------
Gross Profit.......................... 187.5 273.6 236.1 200.2 161.4 86.1 262.3
Research, development and related
engineering........................... 40.6 67.3 74.3 87.3 94.7 61.7 101.2
Marketing, General and Administrative... 93.9 119.2 134.6 130.6 109.8 68.3 118.3
Settlement of royalty obligation........ -- -- 32.6 -- -- -- --
Restructuring and related charges....... -- -- -- 14.5 (0.5) -- --
------ ------ ------ ------ ------ ------ ------
Operating income (loss)............... 53.0 87.1 (5.4) (32.2) (42.6) (43.9) 42.8
Interest and other income............... 9.5 13.5 10.6 6.1 6.5 4.9 7.3
Interest expense........................ (0.8) (0.8) (1.0) (1.0) (1.3) (0.8) (1.7)
------ ------ ------ ------ ------ ------ ------
Income (loss) before income taxes and
minority interest................... 61.7 99.8 4.2 (27.2) (37.4) (39.8) 48.4
Provision (benefit) for income taxes.... 22.2 35.0 1.5 (13.6) (12.0) (12.7) 17.4
Minority interest....................... 0.2 0.7 0.1 -- -- -- --
------ ------ ------ ------ ------ ------ ------
Net income (loss)..................... 39.3 64.1 2.6 (13.6) (25.5) (27.1) 31.0
Net income (loss) per
share -- basic...................... 1.66 2.09 (0.08) (0.42) (0.77) (0.82) 0.92
Net income (loss) per
share -- diluted.................... 1.61 2.06 0.08 (0.42) (0.77) (0.82) 0.85
CONSOLIDATED BALANCE SHEET DATA:
Working capital......................... 328.1 466.6 420.5 372.0 382.2 372.9 530.5
Total assets............................ 513.7 744.3 756.0 730.6 754.8 695.7 838.2
Long-term debt and capital leases....... 2.0 1.7 6.5 5.9 26.8 5.3 25.8
Stockholders' equity.................... 358.6 551.2 573.1 561.5 557.5 553.0 600.0
RATIOS AND OTHER DATA:
Gross margin.......................... 39.5% 41.6% 38.4% 32.9% 34.1% 30.3% 43.5%
Operating margin...................... 11.2% 13.2% (0.9%) (5.3%) (9.0%) (15.5%) 7.1%
Sales of photolithography systems (in
units).............................. 13 38 42 48 42 25 50
Number of employees at the end of
period(2)........................... 2,757 3,185 3,515 2,660 3,078 2,467 3,458
</TABLE>
---------------
(1) The summary consolidated financial data set forth above should be read in
conjunction with Management's Discussion and Analysis of Financial Condition
and Results of Operations and Silicon Valley Group's Audited Financial
Statements and the Notes to its Audited Consolidated Financial Statements in
its 1999 Annual Report on Form 10-K, incorporated herein by reference.
Amounts presented above may not sum due to rounding.
(2) The number of employees presented includes 263, 44, 290, 197, 398, 417 and
153 contract employees at September 1995, 1996, 1997, 1998 and 1999 and June
30, 1999 and 2000, respectively.
12
<PAGE> 19
SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL DATA
<TABLE>
<CAPTION>
SIX MONTHS
YEARS ENDED DECEMBER 31, ENDED JUNE 30,(3)
---------------------------------------------- ---------------------------------
1997 1998 1999 1999 1999 2000 2000
--------- --------- --------- ---------- -------- --------- ----------
U.S. U.S.
EUROS(1) EUROS(1) EUROS(1) DOLLARS(2) EUROS(1) EUROS(1) DOLLARS(2)
--------- --------- --------- ---------- -------- --------- ----------
(IN '000, EXCEPT PER SHARE DATA)
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net sales........................ 1,344,712 1,301,153 1,725,728 1,498,288 598,687 1,363,863 1,184,114
Cost of sales.................... 854,814 887,658 1,185,102 1,028,913 443,758 840,547 729,768
--------- --------- --------- --------- ------- --------- ---------
Gross Profit............. 489,898 413,495 540,626 469,375 154,929 523,316 454,346
Operating expenses:
Research and development costs... 163,698 229,784 277,883 241,260 123,722 179,431 155,783
Research and development
credits........................ (20,446) (40,254) (38,814) (33,699) (25,809) (11,545) (10,023)
Selling, general and
administrative expenses........ 116,797 150,397 215,405 187,016 90,000 124,155 107,792
Settlement of royalty
obligation..................... 27,942 -- -- -- -- -- --
Restructuring and related
charges........................ -- 12,489 -- -- -- -- --
--------- --------- --------- --------- ------- --------- ---------
Total expenses........... 287,991 352,416 454,474 394,577 187,913 292,041 253,552
Operating income
(loss)................. 201,907 61,079 86,152 74,798 (32,984) 231,275 200,794
Gain on sale of marketable
securities..................... (14,130) -- -- -- -- -- --
Interest (income) expense, net
and other income............... (8,965) (5,561) (1,998) (1,735) (1,706) (3,379) (2,934)
--------- --------- --------- --------- ------- --------- ---------
Income (loss) before
income taxes........... 225,002 66,640 88,150 76,532 (31,278) 234,654 203,728
Provision (benefit) for income
taxes.......................... 73,407 16,284 27,924 24,244 (11,639) 72,000 62,511
Minority Interest................ 79 -- -- -- -- -- --
--------- --------- --------- --------- ------- --------- ---------
Net income (loss)........ 151,516 50,356 60,226 52,289 (19,639) 162,654 141,217
========= ========= ========= ========= ======= ========= =========
Net income (loss) per share --
basic.......................... 0.33 0.11 0.13 0.11 (0.04) 0.35 0.31
Net income (loss) per share --
diluted........................ 0.33 0.11 0.13 0.11 (0.04) 0.34 0.29
</TABLE>
---------------
(1) Original United States dollar amounts presented in Silicon Valley Group's
financial statements have been converted into euros using the average
historical rate of $1.00 = Euro 1.0202 for the six months ended June 30,
2000, $1.00 = Euro 0.9461 for the six months ended June 30, 1999,
$1.00 = Euro 0.9257 for the year ended December 31, 1999, $1.00 = Euro
0.8887. For the years ended December 31, 1998 and December 31, 1997 the
fixed exchange rate effective upon the implementation of the Euro on January
1, 1999 of $1.00 = Euro 0.8576 is used. Effective for the fiscal year 1999,
ASM Lithography changed its reporting currency from Dutch guilders to euros.
Prior year balances have been restated based on the fixed exchange rate of
Euro 1.00 to NLG 2.20371 as of January 1, 1999. The comparative balances
reported in euros depict the same trends as would have been presented if ASM
Lithography had continued to present balances in Dutch guilders.
(2) Solely for the convenience of the reader, certain euro amounts presented as
of and for the year ended December 31, 1999 and the six months ended June
30, 2000, used in calculating the pro forma condensed combined financial
data, have been translated into United States dollars using the exchange
rate in effect on October 10, 2000 of $1.00 = Euro 1.1518.
(3) For Silicon Valley Group, results for the six months ended March 31, 2000
are included. As a consequence, the results for the three months ended June
30, 2000 have been excluded from the Pro Forma Condensed Combined Financial
Data. Silicon Valley Group's net sales and net income for the three months
ended June 30, 2000 are Euro 222.4 million and Euro 13.4 million,
respectively.
13
<PAGE> 20
UNAUDITED COMPARATIVE PER SHARE INFORMATION
We have summarized below the per share information for our respective
companies on a historical, pro forma combined and equivalent basis. The Silicon
Valley Group Per Share Equivalents are calculated by multiplying the Pro Forma
Combined per share amounts by 1.286, the exchange ratio. You should read this
information together with ASM Lithography's and Silicon Valley Group's
consolidated financial statements and the unaudited pro forma condensed
consolidated financial information included in this proxy statement-prospectus.
The pro forma combined per share information is not necessarily indicative of
the operating results or financial position that would have been achieved if the
merger had been completed as of the beginning of the period presented, nor is it
necessarily indicative of the future operating results or financial position of
ASM Lithography or Silicon Valley Group.
<TABLE>
<CAPTION>
SIX MONTHS
ENDED YEARS ENDED
JUNE 30, DECEMBER 31,
---------- ---------------------
2000 1999 1998 1997
---------- ----- ----- -----
EUROS EUROS EUROS EUROS
<S> <C> <C> <C> <C>
UNAUDITED PRO FORMA COMBINED:
Net income (loss) per common share:
Basic.................................................. 0.35 0.13 0.11 0.33
Diluted................................................ 0.34 0.13 0.11 0.33
Cash dividends declared per common share.................. -- -- -- --
Book value per common share............................... 3.03 2.54
UNAUDITED SILICON VALLEY GROUP PER SHARE EQUIVALENTS:
Net income (loss) per common share:
Basic.................................................. 0.45 0.17 0.14 0.43
Diluted................................................ 0.44 0.17 0.14 0.43
Cash dividends declared per common share.................. -- -- -- --
Book value per common share............................... 3.90 3.26
SILICON VALLEY GROUP -- HISTORICAL (FOR THE SIX MONTHS ENDED
MARCH 31, 2000 AND THE YEARS ENDED SEPTEMBER 30, 1999,
1998 AND 1997, RESPECTIVELY):
Net income (loss) per common share:
Basic.................................................. 0.54 (0.72) (0.37) 0.07
Diluted................................................ 0.52 (0.72) (0.37) 0.07
Cash dividends declared per common share.................. -- -- -- --
Book value per common share............................... 18.58 16.83
ASM LITHOGRAPHY -- HISTORICAL:
Net income (loss) per common share:
Basic.................................................. 0.35 0.19 0.15 0.36
Diluted................................................ 0.33 0.19 0.15 0.36
Cash dividends declared per common share.................. -- -- -- --
Book value per common share............................... 1.85 1.47
</TABLE>
14
<PAGE> 21
COMPARATIVE PER SHARE MARKET PRICE DATA
ASM Lithography ordinary shares are traded in the form of Shares of New
York Registry on the Nasdaq National Market and in bearer form on the Official
Segment of the stock market of the Euronext Amsterdam N.V. under the symbol
"ASML." The principal trading market for ASM Lithography ordinary shares is the
Official Segment of the stock market of the Euronext Amsterdam N.V. Silicon
Valley Group common stock is traded on the Nasdaq National Market under the
symbol "SVGI."
The following table sets forth, for the calendar quarters indicated, the
high and low sale prices per ordinary share of ASM Lithography and per share of
common stock of Silicon Valley Group as reported on the Nasdaq National Market.
<TABLE>
<CAPTION>
SILICON VALLEY
GROUP ASM LITHOGRAPHY
COMMON STOCK ORDINARY SHARES
--------------------------------- ---------------------------------------------------
NASDAQ NATIONAL NASDAQ NATIONAL EURONEXT
MARKET MARKET AMSTERDAM
(U.S. DOLLARS) (U.S. DOLLARS) (EUROS)(1)
HIGH LOW HIGH LOW HIGH LOW
--------------- --------------- --------------- --------------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
1998:
First Quarter........................... 27.875 19.000 16.333 10.438 15.133 9.900
Second Quarter.......................... 21.500 15.750 16.313 9.333 14.883 8.750
Third Quarter........................... 16.500 8.000 10.875 5.083 9.983 4.167
Fourth Quarter.......................... 13.313 6.625 10.729 4.396 9.133 3.633
1999:
First Quarter........................... 17.313 10.375 15.771 10.792 14.617 8.983
Second Quarter.......................... 16.813 12.063 19.792 12.875 18.700 11.633
Third Quarter........................... 17.688 11.000 23.000 18.521 22.417 16.683
Fourth Quarter.......................... 18.813 10.500 37.917 21.542 37.167 20.067
2000:
First Quarter........................... 32.375 16.531 50.104 33.042 51.833 30.583
Second Quarter.......................... 29.250 23.500 44.813 32.125 48.200 35.330
Third Quarter........................... 33.250 20.000 47.000 31.813 50.300 36.000
Fourth Quarter Through December 21...... 37.859 24.938 32.875 19.500 38.440 22.900
</TABLE>
---------------
(1) Prior year data have been restated based on the fixed exchange rate as of
January 1, 1999 (Euro 1.00 to NLG 2.20371).
As of December 20, 2000, Silicon Valley Group had 34,826,388 shares outstanding
held by 734 holders of record.
15
<PAGE> 22
The following table sets forth the closing prices per share of Silicon
Valley Group common stock as reported on the Nasdaq National Market and the
closing prices per ordinary share of ASM Lithography as reported on the Nasdaq
National Market on (1) September 29, 2000, the business day preceding public
announcement that ASM Lithography and Silicon Valley Group had entered into the
merger agreement, and (2) December 21, 2000, the last full trading day for which
closing prices were available at the time of the printing of this proxy
statement-prospectus.
The following table also sets forth the equivalent price per share of
common stock of Silicon Valley Group on those dates. The equivalent price per
share of Silicon Valley Group common stock is equal to the closing price of an
ASM Lithography ordinary share on that date as reported on the Nasdaq National
Market multiplied by 1.286, the number of ASM Lithography ordinary shares to be
issued in exchange for each share of Silicon Valley Group common stock. This
equivalent per share price reflects the value of the ASM Lithography ordinary
shares you would receive for each share of your Silicon Valley Group common
stock if the merger was completed on either of these dates.
<TABLE>
<CAPTION>
SILICON VALLEY GROUP ASM LITHOGRAPHY EQUIVALENT PER
COMMON STOCK ORDINARY SHARES SHARE PRICE
-------------------- --------------- --------------
<S> <C> <C> <C>
September 29, 2000............................. $26.3125 $32.3125 $41.5539
December 21, 2000.............................. $27.250 $21.8125 $28.0509
</TABLE>
Because the market price of ASM Lithography ordinary shares that you will
receive in the merger may increase or decrease before the completion of the
merger, you are urged to obtain current market quotations.
DIVIDEND POLICY
ASM Lithography has never paid any cash dividends on its ordinary shares.
Silicon Valley Group has never paid any cash dividends on its common stock and
is prohibited under the merger agreement, and pursuant to its credit facility,
from paying any dividends before the merger. ASM Lithography currently intends
to retain future earnings for ASM Lithography's business and does not anticipate
paying any dividends in the foreseeable future.
RECENT DEVELOPMENTS
SILICON VALLEY GROUP -- FOURTH QUARTER AND FISCAL YEAR 2000 RESULTS
On October 31, 2000, Silicon Valley Group announced its financial results
for the quarter and year ended September 30, 2000. These financial results have
been filed with the Securities and Exchange Commission on a Form 8-K, dated
December 12, 2000, that is incorporated by reference in this proxy
statement-prospectus.
ASM LITHOGRAPHY -- YEAR 2000 OUTLOOK
As previously announced on July 19, 2000 in connection with the publication
of ASM Lithography's first half results, during the second half of 2000 ASM
Lithography expects to further increase its output and shipments to customers as
compared to the first half. ASM Lithography also expects a further improvement
of its margins and results for the second half of 2000.
16
<PAGE> 23
THE COMPANIES
ASM LITHOGRAPHY
ASM Lithography develops, manufactures, markets and services advanced
photolithography projection systems. Photolithography projection systems are
essential to the fabrication of modern integrated circuits, also known as
semiconductors. In the photolithography step of the fabrication process,
integrated circuit patterns contained on a photomask, also referred to as a
mask, are projected onto the wafers that are the building blocks of
semiconductors. Each wafer consists of a substrate, typically composed of
silicon, on which has been deposited a layer of electrically insulating or
conductive material and a layer of light sensitive polymer material known as a
photoresist.
Historically, there have been two major approaches to photolithography
systems: full field scanning projection aligners called "scanners" and
step-and-repeat production aligners, or "steppers." Scanners project a
full-scale mask image onto a moving full-size wafer, while steppers sequentially
expose a small section of a wafer in a stepped sequence of exposures, but do so
by reducing the size of a mask image several times. Recently, companies like ASM
Lithography have combined these two technologies to develop a "Step & Scan"
method. ASM Lithography products include both steppers and Step & Scan systems.
ASM Lithography supplies these systems to semiconductor manufacturers throughout
the United States, Western Europe and Asia. ASM Lithography also provides its
customers with a full range of support, from advanced process and product
applications knowledge to complete round-the-clock service support with uptime
performance guarantees.
ASM Lithography believes that it currently is the second largest supplier
of photolithography equipment in the world and that, upon completion of the
merger, it will be the number one provider of photolithography equipment to the
worldwide semiconductor industry. ASM Lithography's major customers, measured in
terms of its historical revenues, include Advanced Micro Devices, Hyundai
Electronics, Micron Technology, Motorola, National Semiconductor Corporation,
Philips Semiconductor, Samsung Electronics, ST Microelectronics, Taiwan
Semiconductors Manufacturing, United Silicon Corporation and Macronix.
ASM Lithography's strategic objective is to realize profitable, sustainable
growth by providing leading edge imaging solutions to the worldwide
semiconductor industry that continually improve customers' competitiveness by
enhancing the value of their ownership of ASM Lithography equipment.
The principal elements of ASM Lithography's value of ownership strategy
are:
- maintaining significant levels of research and development spending in
order to offer customers, at the earliest possible date, the most
advanced technology suitable for high-throughput, low-cost volume
production
- offering customers continuing improvements in productivity and value by
introducing advanced technology based on the modular, upgradable design
of ASM Lithography's families of lithography tools
- pursuing continuing reductions in the cycle time between a customer's
order of a lithography tool and the use of that tool in volume production
at the customer site
- providing superior customer support services that ensure rapid and
efficient installation, as well as continuing on-site support and
training to optimize the imaging process and improve customers'
productivity
- expanding operational flexibility in research and manufacturing by
reinforcing strategic alliances with world-class partners
17
<PAGE> 24
SILICON VALLEY GROUP
Silicon Valley Group primarily designs, manufactures, markets and services
semiconductor processing equipment used in the fabrication of integrated
circuits. Silicon Valley Group's principal product groups focus primarily on
photolithography, photoresist processing, oxidation/diffusion, low-pressure
chemical vapor deposition and atmospheric pressure chemical vapor deposition.
Silicon Valley Group's photolithography equipment, like ASM Lithography's,
includes Step & Scan products. Silicon Valley Group's photoresist processing
equipment performs the steps required to process semiconductor wafers prior to
photolithography exposure, including coating of the semiconductor wafer and
promoting adhesion between the layers of silicon in the wafer as well as the
steps, such as development and baking, required to treat semiconductor wafers
after photolithography exposure and prior to etching. Silicon Valley Group's
oxidation/diffusion, low-pressure chemical vapor deposition and atmospheric
pressure chemical vapor deposition equipment, together referred to as Silicon
Valley Group's Thermal products, are the products that grow insulating layers on
the wafers (oxidation), diffuse chemicals called dopants into the silicon
structure of the wafer (diffusion), and deposit insulating or conducting films
on the wafer surface (deposition). In addition, a precision optics group
supplies certain components for Silicon Valley Group's photolithography products
and government markets.
Silicon Valley Group's products incorporate proprietary technologies and
unique processes, and focus on providing process and product technologies and
productivity enhancements to its customers. Silicon Valley Group works closely
with its existing and potential customers in the development of new systems and
technologies and supports its products through a network of worldwide service
and technical support organizations.
Silicon Valley Group's customer base includes companies that manufacture
semiconductor devices primarily for sale to others and companies that
manufacture semiconductor devices primarily for internal use. Repeat sales to
existing customers represent a significant portion of Silicon Valley Group's
processing equipment sales. By working closely with its established customer
base, Silicon Valley Group is able to identify new product development
opportunities. Silicon Valley Group believes that its installed customer base
represents a significant competitive advantage. Silicon Valley Group's customers
during fiscal 1999 included the following:
- IBM
- Intel
- Motorola
- ST Microelectronics
Of the customers listed above, Intel accounted for approximately 56% of SVG's
net sales in fiscal 1999, while the other customers each accounted for at least
3.5% of net sales in fiscal 1999.
18
<PAGE> 25
RISK FACTORS
By voting in favor of the merger, you will be choosing to invest in ASM
Lithography ordinary shares. An investment in ASM Lithography ordinary shares
involves a high degree of risk. In addition to the other information contained
in or incorporated by reference into this proxy statement-prospectus, you should
carefully consider the following risk factors in deciding whether to vote for
the merger.
RISKS RELATING TO THE MERGER
YOU WILL RECEIVE 1.286 ASM LITHOGRAPHY ORDINARY SHARES DESPITE CHANGES IN MARKET
VALUE OF SILICON VALLEY GROUP COMMON STOCK OR ASM LITHOGRAPHY ORDINARY SHARES
Upon completion of the merger, each share of Silicon Valley Group common
stock will be exchanged for 1.286 ASM Lithography ordinary shares. There will be
no adjustment for changes in the market price of either Silicon Valley Group
common stock or ordinary shares of ASM Lithography, and Silicon Valley Group is
not permitted to "walk away" from the merger or resolicit the vote of its
stockholders solely because of changes in the market price of ASM Lithography
ordinary shares. Accordingly, the specific dollar value of the ASM Lithography
ordinary shares to be received by you upon completion of the merger will depend
on the market value of ASM Lithography ordinary shares at the time of completion
of the merger. Since, September 29, 2000, the last trading day before the merger
was publicly announced, through December 21, 2000, the value of the ASM
Lithography ordinary shares to be received for each outstanding share of Silicon
Valley Group common stock in the merger has decreased from $41.55 to $28.05, a
decrease of approximately 32.5%.
SILICON VALLEY GROUP OFFICERS AND DIRECTORS HAVE CONFLICTS OF INTEREST THAT MAY
INFLUENCE THEM TO SUPPORT OR APPROVE THE MERGER
The directors and officers of Silicon Valley Group participate in
arrangements and have continuing indemnification against liabilities that
provide them with interests in the merger that are different from, or are in
addition to, yours.
In particular, Silicon Valley Group has existing employment agreements with
Messrs. Papken S. Der Torossian, its Chairman and Chief Executive Officer,
William A. Hightower, its President and Chief Operating Officer, Russell G.
Weinstock, its Vice President and Chief Financial Officer, Boris Lipkin, its
Corporate Vice President, and other executives of Silicon Valley Group which
provide for certain payments, acceleration of options and benefits if their
employment is terminated following a change in control.
In connection with the merger, Silicon Valley Group has entered into
consulting agreements with each of Messrs. Der Torossian, Hightower and
Weinstock. These consulting agreements compensate these executives for acting as
consultants for, and assisting Silicon Valley Group in the integration of
Silicon Valley Group into ASM Lithography, agreeing to refrain from competing
with ASM Lithography in certain lines of business and agreeing to forego certain
cash payments that these executives are entitled to receive under the employment
agreements described above.
As a result, these directors and officers could be more likely to vote to
approve the merger agreement than if they did not hold these interests. Silicon
Valley Group stockholders should consider whether these interests may have
influenced these directors and officers to support or recommend the merger.
Please see the section entitled "Interests of Certain Silicon Valley Group
Directors, Officers and Affiliates in the Merger" on page 44 of this proxy
statement-prospectus.
19
<PAGE> 26
ALTHOUGH ASM LITHOGRAPHY AND SILICON VALLEY GROUP EXPECT THAT THE MERGER WILL
RESULT IN BENEFITS, THOSE BENEFITS MAY NOT BE REALIZED
ASM Lithography and Silicon Valley Group entered into the merger agreement
with the expectation that the merger will result in benefits, including the
creation of the number one supplier of photolithography equipment, acceleration
of next generation technology through joint research and development and the
expansion of ASM Lithography's product offerings to include Silicon Valley
Group's photoresist processing and Thermal product lines. Achieving the benefits
of the merger will depend in part on the integration of our technology,
operations and personnel in a timely and efficient manner so as to minimize the
risk that the merger will result in the loss of customers or key employees or
the continued diversion of the attention of management. Among the challenges
involved in this integration is demonstrating to our customers that the merger
will not result in adverse changes in client service standards or business focus
and persuading our personnel that our business cultures are compatible. There
can be no assurance that ASM Lithography and Silicon Valley Group can be
successfully integrated or that any of the anticipated benefits will be
realized, and failure to do so could have a material adverse effect on ASM
Lithography's business, financial condition and operating results.
FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY IMPACT SILICON VALLEY GROUP'S
STOCK PRICE AND FUTURE BUSINESS AND OPERATIONS
If the merger is not completed for any reason, Silicon Valley Group may be
subject to a number of material risks, including the following:
- Silicon Valley Group may be required to pay ASM Lithography a termination
fee of $47,000,000, which amounted to approximately 2.75% of the total
value of the merger consideration to be received by the Silicon Valley
Group stockholders as of the time the merger was publicly announced on
October 2, 2000.
- the price of Silicon Valley Group common stock may decline to the extent
that the current market price of Silicon Valley Group common stock
reflects a market assumption that the merger will be completed
- costs related to the merger, such as legal and accounting fees, must be
paid even if the merger is not completed. These costs are estimated to be
$6,550,000 in the aggregate.
- uncertainty related to the merger may damage customer or employee
relationships
Further, if the merger is terminated and Silicon Valley Group's board of
directors determines to seek another merger or business combination, it may be
unable to find a partner willing to pay an equivalent or more attractive price
than that payable in the merger. In addition, while the merger agreement is in
effect and subject to certain limited exceptions described on page 62 of this
proxy statement-prospectus, Silicon Valley Group is prohibited from soliciting,
initiating or knowingly encouraging or entering into certain extraordinary
transactions, such as a merger, sale of assets or other business combination,
with any party other than ASM Lithography.
CUSTOMER AND EMPLOYEE UNCERTAINTY RELATED TO THE MERGER COULD HARM THE COMBINED
COMPANY
Silicon Valley Group's customers may, in response to the announcement of
the merger, delay or defer purchasing decisions. Any delay or deferral in
purchasing decisions by Silicon Valley Group's customers could have a material
adverse effect on ASM Lithography's operations after the merger or Silicon
Valley Group's business, regardless of whether or not the merger is ultimately
completed. Similarly, current and prospective Silicon Valley Group employees may
experience uncertainty about their future role with ASM Lithography. This may
adversely affect Silicon Valley Group's ability to attract and retain key
management, marketing and technical personnel, which could have a material
adverse impact on ASM Lithography after the merger. As of the date of this proxy
statement-prospectus, Silicon Valley Group has
20
<PAGE> 27
not experienced any materially adverse change in customer orders or employee
attrition since the announcement of the merger.
THE MERGER WILL RESULT IN SUBSTANTIAL COSTS WHETHER OR NOT COMPLETED
The merger will result in significant costs to ASM Lithography and Silicon
Valley Group. Excluding costs associated with combining the operations of the
two companies and severance benefits and costs associated with discontinuing
some redundant business activities, which costs are difficult to determine,
direct transaction costs are estimated at approximately $28,500,000. These costs
are expected to consist primarily of fees for investment bankers, lawyers,
accountants, filing fees and financial printing fees. The aggregate amount of
these costs may be greater than currently anticipated. Some of these costs will
be incurred whether or not the merger is completed.
RISKS FOLLOWING COMPLETION OF THE MERGER
BECAUSE THE SEMICONDUCTOR INDUSTRY IS HIGHLY CYCLICAL, ASM LITHOGRAPHY MAY BE
ADVERSELY AFFECTED BY ANY DOWNTURN IN THE INDUSTRY
ASM Lithography's business and operating results could be materially
adversely affected by any future downturns in the semiconductor industry and
related fluctuations in the demand for capital equipment. Sales of its
photolithography systems depend in large part upon the level of capital
expenditures by semiconductor manufacturers. These capital expenditures depend
upon a range of competitive and market factors faced by manufacturers,
including:
- the current and anticipated market demand for semiconductors and for
products utilizing semiconductors
- semiconductor prices
- semiconductor production costs
- general economic conditions
Historically, the semiconductor market has been highly cyclical and has
experienced recurring periods of oversupply, resulting in significantly reduced
demand for capital equipment, including advanced photolithography projection
systems such as the wafer steppers and Step & Scan systems ASM Lithography will
produce. Despite this cyclicality, ASM Lithography must maintain significant
levels of research and development expenditures in order to maintain its
competitive position.
ASM Lithography expects that the semiconductor industry will experience
future downturns. ASM Lithography cannot predict the timing, duration or
severity of any future downturn or the corresponding adverse effect on the
business, financial condition or results of operations of ASM Lithography.
ASM LITHOGRAPHY'S BUSINESS WILL SUFFER IF IT DOES NOT RESPOND RAPIDLY TO THE
COMMERCIAL AND TECHNOLOGICAL CHANGES IN THE SEMICONDUCTOR INDUSTRY
The semiconductor manufacturing industry is subject to:
- rapid technological change
- frequent product introductions and enhancements
- evolving industry standards
- changes in customer requirements
- continued shortening of product life cycles
21
<PAGE> 28
ASM Lithography's products could become obsolete sooner than anticipated
because of a faster than anticipated change in one or more of the technologies
related to its products or in market demand for products based on a particular
technology. ASM Lithography's success in developing new photolithography systems
and in enhancing its existing products depends on a variety of factors,
including the successful integration of Silicon Valley Group's business and
products into those of ASM Lithography, the successful management of the
combined company's research and development program and timely completion of
product development and design relative to competitors.
ASM Lithography's competitiveness will depend upon its ability to develop
new and enhanced photolithography equipment and to introduce these systems at
competitive prices on a timely basis. If ASM Lithography does not, customers
will not integrate the systems into the planning and design of new fabrication
facilities and upgrades of existing facilities. In order to retain customers,
ASM Lithography must continually enhance the performance of its exiting systems.
As a result, ASM Lithography will continue to incur significant capital
expenditures and expenditures for research and development and will face
significant working capital requirements to maintain inventory to support its
increasingly sophisticated product range.
ASM LITHOGRAPHY FACES INTENSE COMPETITION
The photolithography equipment industry is intensely competitive. The
principal elements of competition in our markets are the technical performance
characteristics of a photolithography system and the cost of ownership of that
system based on its purchase price, maintenance costs, productivity and customer
service and support. ASM Lithography's competitiveness will depend upon its
ability to develop new and enhanced photolithography equipment that is
competitively priced and introduced on a timely basis.
Because the cost to develop new photolithography systems is extremely high,
the photolithography equipment industry is characterized by the dominance of a
few suppliers. ASM Lithography's primary competitors are Nikon and Canon. Nikon
and Canon are the dominant suppliers in the Japanese market, which accounts for
a significant proportion of worldwide semiconductor production and historically
has been difficult for non-Japanese companies to penetrate.
Nikon and Canon each has substantial financial resources and has stated
that it will introduce new products with improved price and performance
characteristics that will compete directly with our products, which could cause
a decline in ASM Lithography's sales or loss of market acceptance of its wafer
steppers and Step & Scan systems. In addition, adverse market conditions,
industry overcapacity or a decrease in the value of the Japanese yen in relation
to the euro could lead to intensified price-based competition in those markets
that account for the majority of ASM Lithography's sales, resulting in lower
prices and margins and a negative impact on its business, financial condition
and results of operations.
THE NUMBER OF SYSTEMS ASM LITHOGRAPHY PRODUCES IS LIMITED BY ITS DEPENDENCE ON A
LIMITED NUMBER OF SUPPLIERS OF KEY COMPONENTS
ASM Lithography relies on outside vendors for the components and
subassemblies used in its wafer steppers and Step & Scan systems, each of which
is obtained from a single supplier or a limited number of suppliers. ASM
Lithography's reliance on a limited group of suppliers involves several risks,
including a potential inability to obtain an adequate supply of required
components and the risk of untimely delivery of these subassemblies and
components.
The number of photolithography systems ASM Lithography has been able to
produce has occasionally been limited by the production capacity of Zeiss, the
optics arm of Carl Zeiss-Stiftung, a German foundation. Zeiss is ASM
Lithography's sole supplier of lenses and other critical optical components and
is capable of producing these lenses only in limited numbers. The failure of
Zeiss to maintain and increase production levels in the future could result in
ASM Lithography's inability to fulfill orders, which could
22
<PAGE> 29
damage relationships with current and prospective customers and have an adverse
effect on its business, financial condition and results of operations. ASM
Lithography's agreement with Zeiss will remain in place until either party
provides at least three years' notice of its intent to terminate. If Zeiss were
to terminate its relationship with ASM Lithography or if Zeiss were unable to
maintain production of lenses over a prolonged period, ASM Lithography would
effectively cease to be able to conduct much of its business.
In addition to Zeiss' current position as ASM Lithography's sole supplier
of lenses, the excimer laser illumination systems that provide the ultraviolet
light source, referred to as "deep UV," used in ASM Lithography high resolution
steppers and Step & Scan systems are available from only a limited number of
suppliers.
Although the timeliness, yield and quality of deliveries to date from ASM
Lithography's remaining subcontractors generally have been satisfactory,
manufacturing certain of these components and subassemblies is an extremely
complex process and delays caused by suppliers may occur in the future. A
prolonged inability to obtain adequate deliveries, or any other circumstance
that requires ASM Lithography to seek alternative sources of supply, could
significantly hinder its ability to ship its products in a timely fashion, which
could damage relationships with current and prospective customers and have a
material adverse effect on its business, financial condition and operating
results.
THE PACE OF INTRODUCTION OF ASM LITHOGRAPHY'S NEW PRODUCTS IS ACCELERATING AND
IS ACCOMPANIED BY SIGNIFICANT COSTS
The development and initial production, installation and enhancement of the
systems ASM Lithography produces are accompanied by design and production delays
and related costs of a nature typically associated with the introduction and
transition to full-scale manufacture of complex capital equipment. While ASM
Lithography expects and plans for a corresponding learning curve effect in its
product development cycle, ASM Lithography cannot precisely predict the time and
expense required to overcome these initial problems and to ensure reliability
and performance to specifications. Moreover, the accelerating pace of
technological change and shorter product life cycles are resulting in increases
in ASM Lithography's expenditures, including greater capital expenditure and
working capital requirements, as well as increases in indirect overhead
expenses. This, in turn, has made it necessary for ASM Lithography to increase
its sales volumes in order to maintain operating margins.
ASM LITHOGRAPHY'S NET SALES AND OPERATING RESULTS ARE VULNERABLE TO THE TIMING
OF ORDERS RECEIVED FROM ITS CUSTOMERS
ASM Lithography's operating results have fluctuated in the past and may
fluctuate significantly in the future depending upon a variety of factors,
including:
- the timing and market acceptance of new products introduced by ASM
Lithography and its competitors
- the timing of significant orders
- the mix of products sold
ASM LITHOGRAPHY DERIVES MOST OF ITS REVENUES FROM THE SALE OF A RELATIVELY SMALL
NUMBER OF PRODUCTS
ASM Lithography derives most of its revenues from the sale of a relatively
small number of wafer steppers and Step & Scan systems (217 in 1999), typically
ranging in price from Euro 1.3 million to Euro 9.1 million. As a result, the
timing of recognition of revenue from a small number of transactions may have a
significant impact on ASM Lithography's net sales and operating results for a
particular reporting
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period. Specifically, the failure to receive anticipated orders, or delays in
shipments near the end of a particular reporting period, due, for example, to:
- unanticipated shipment rescheduling
- cancellation by customers
- unexpected manufacturing difficulties
- delays in deliveries by suppliers
may cause net sales in a particular reporting period to fall significantly below
ASM Lithography's expectations. Inability to meet these expectations would, in
turn, adversely affect its operating results for that period. In addition, the
long production lead times for lenses and certain other components and
subassemblies used in ASM Lithography's photolithography systems could cause
shipments of photolithography systems to be delayed from one reporting period to
the next, which also would adversely affect its financial condition and results
of operations for a particular period.
ASM Lithography's net sales and operating results may be affected by recent
accounting pronouncements by the United States Securities and Exchange
Commission's staff. On December 3, 1999, the Commission staff issued Staff
Accounting Bulletin ("SAB") No. 101, "Revenue Recognition", which addresses
several issues, including the timing for recognizing revenue derived from
selling arrangements that involve contractual customer acceptance provisions and
installation of the product occurs after shipment and transfer of title. ASM
Lithography's existing revenue recognition policy is to recognize revenue at the
time the customer takes title to the product, generally at the time of shipment.
Applying the requirements of SAB No. 101 may result in a change in its revenue
recognition policy. The effect of any change would be recognized as a cumulative
effect of a change in accounting no later than the end of 2000. ASM Lithography
has not yet determined the effect this change will have on its results of
operations, financial position and cash flows because the guidelines for
implementing these requirements were only recently released.
FAILURE TO ADEQUATELY PROTECT THE INTELLECTUAL PROPERTY RIGHTS UPON WHICH ASM
LITHOGRAPHY DEPENDS COULD HARM ITS BUSINESS
ASM Lithography relies on patents, copyrights, trade secrets and other
instruments to protect its proprietary technology. ASM Lithography faces the
risks that:
- competitors will be able to develop similar technology independently
- its pending patent applications may not be issued
- the steps it takes to prevent misappropriation or infringement of its
intellectual property may not be successful
- intellectual property laws may not adequately protect its intellectual
property
In addition, ASM Lithography may need to litigate in order to enforce its
patents, copyrights or other intellectual property rights, to protect its trade
secrets, to determine the validity and scope of the proprietary rights of others
or to defend against claims of infringement. This litigation, or its threat,
could result in substantial costs and diversion of its resources and could have
a material adverse effect on its business and results of operations.
DEFENDING AGAINST INTELLECTUAL PROPERTY CLAIMS BY OTHERS COULD HARM ASM
LITHOGRAPHY'S BUSINESS
In the course of ASM Lithography's business, it is subject to claims by
third parties alleging that its products or processes infringe upon their
intellectual property rights. In particular, on May 23, 2000,
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Ultratech Stepper Inc. filed a lawsuit in the United States District Court in
the Eastern District of Virginia against ASM Lithography and its competitor,
Canon. Ultratech Stepper alleges that ASM Lithography and Canon are infringing
upon Ultratech Stepper's rights under a United States patent through the
commercialization in the United States of advanced photolithography projection
systems embodying technology that, in particular, is used in Step & Scan
systems. ASM Lithography does not expect that this litigation will have a
material adverse effect on its future operating results or financial position.
In addition, some of ASM Lithography's customers have received notice of
infringement from third parties alleging that the manufacture of semiconductor
products and/or the equipment used to manufacture semiconductor products
infringes patents issued to those third parties. ASM Lithography has been
advised that it could be obligated to pay damages to customers if use of its
photolithography systems by those customers were found to infringe any valid
patents issued to third parties. If these claims were successful, ASM
Lithography could be required to indemnify its customers for some or all of any
losses incurred as a result of that infringement. ASM Lithography also may incur
substantial licensing or settlement costs where doing so would strengthen or
expand its intellectual property rights or limit its exposure to intellectual
property claims of others.
Furthermore, ASM Lithography continues to rely on a number of patents owned
by Royal Philips Electronics. While Royal Philips Electronics has granted ASM
Lithography, without charge, a worldwide, irrevocable, non-exclusive license
under those patents, they remain subject to the same risks regarding validity,
scope and enforecability that relate to ASM Lithography's patents. In addition,
Royal Philips Electronics has no obligation to defend or enforce such patents
against third parties.
BECAUSE A HIGH PERCENTAGE OF ASM LITHOGRAPHY'S NET SALES IS DERIVED FROM A FEW
CUSTOMERS, REDUCTION IN ORDERS FROM ANY ONE CUSTOMER COULD REDUCE ITS SALES AND
HARM ITS OPERATING RESULTS AND THE MARKET FOR ITS ORDINARY SHARES
Historically, ASM Lithography has sold a substantial number of lithographic
systems to a limited number of customers. ASM Lithography had two customers,
Samsung Electronics and Taiwan Semiconductor Corp., that together accounted for
33.7% of its total net sales in 1999 and 30.6% of its total net sales in the
first half of 2000. Silicon Valley Group had one customer, Intel Corporation,
that accounted for an aggregate of 56% of its total net sales in 1999 and 49% of
its total net sales in the first half of 2000. While the composition of the
group comprising its largest customers may vary from year to year, ASM
Lithography expects that sales to relatively few customers will continue to
account for a high percentage of net sales in any particular year. The loss of
any significant customers or any reduction in orders by a significant customer
may have an adverse effect on its business, financial condition, results of
operations and the market price of its shares.
DISRUPTION IN TAIWAN'S POLITICAL ENVIRONMENT COULD SERIOUSLY HARM ASM
LITHOGRAPHY'S BUSINESS AND THE MARKET PRICE OF ITS SHARES
Approximately 24% of ASM Lithography's 1999 revenues and 37% of its
year-end 1999 backlog (in terms of revenues) is derived from customers in
Taiwan. Accordingly, ASM Lithography's business and financial condition and the
market price of its shares may be affected by changes in Taiwanese government
policies and political, economic or social instability.
Taiwan has unique international political status. The People's Republic of
China asserts sovereignty over Taiwan and does not recognize the legitimacy of
the Taiwan government. Relations between Taiwan and the People's Republic of
China and other factors affecting Taiwan's political environment could affect
ASM Lithography's business and the market price of its shares.
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ASM LITHOGRAPHY'S EXPANSION OF OPERATIONS IN RECENT YEARS HAS INCREASED ITS
FINANCIAL LEVERAGE AND COULD STRAIN ITS CONTROL SYSTEMS
In the past several years, ASM Lithography has significantly increased the
scale of its operations to support increased sales. Steps taken include:
- hiring of additional personnel
- expansion of production facilities
- increase production volumes
The increase in scale has required it to maintain higher inventory levels
and has increased its working capital requirements. ASM Lithography's business,
financial condition and results of operations may be adversely affected if:
- its net sales do not remain at or increase above recent levels, or
- its systems, procedures and controls are not adequate to support
continued rapid expansion of its operations.
Conversely, its expansion may not be adequate to meet customer demands for
its products and services.
ASM LITHOGRAPHY IS DEPENDENT ON THE CONTINUED OPERATION OF OUR MANUFACTURING
FACILITIES
All of ASM Lithography's manufacturing activities, including subassembly,
final assembly and system testing, currently take place in two separate clean
room facilities located in Veldhoven, The Netherlands. Although the acquisition
of Silicon Valley Group will add an additional seven plants, a major
catastrophe, such as a natural disaster, could result in significant
interruption of ASM Lithography's business and potential loss of customers and
sales after the merger.
ASM LITHOGRAPHY IS DEPENDENT ON THE ATTRACTION AND RETENTION OF KEY PERSONNEL
AND HIGHLY QUALIFIED PROFESSIONALS
ASM Lithography's future operating results depend in significant part upon
the continued contributions of its officers and key employees, including a
number of systems development specialists with advanced qualifications in
engineering, optics and computing. In addition, ASM Lithography's future
operating results depend in part on its ability to attract, train and retain
other qualified management, technical, sales and support personnel for its
operations. The competition for these people in the semiconductor industry has
become increasingly intense in recent years. In addition, due to the
accelerating pace of technological change, it has become increasingly difficult
to train new personnel in time to meet product development and sales growth
requirements. The loss of key employees or ASM Lithography's inability to
attract, retain and motivate qualified personnel could have a material adverse
effect on its business, financial condition and results of operations.
FAILURE TO CONTINUE ASM LITHOGRAPHY'S RELATIONSHIP WITH ROYAL PHILIPS
ELECTRONICS COULD ADVERSELY AFFECT ITS OPERATING RESULTS
Although ASM Lithography has generally operated on a stand-alone basis
since its formation in 1984, it derives a benefit from continued access to Royal
Philips Electronics' basic research resources and capabilities, which allow it
to develop new and enhanced photolithography equipment. ASM Lithography and
Royal Philips Electronics entered into several agreements, each of which may be
terminated by either party's 30 months' notice, under which Royal Philips
Electronics provides certain research and development services to ASM
Lithography. Although, on March 29, 2000, ASM Lithography agreed with
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Royal Philips Electronics as to the basic terms on which Royal Philips
Electronics and ASM Lithography would renew these agreements, ASM Lithography
has not yet entered into new definitive agreements. Failure to renew these
arrangements or secure alternative basic research capabilities could adversely
affect ASM Lithography's long-term operating performance and operating results.
FOLLOWING THE MERGER, ASM LITHOGRAPHY MAY HAVE GREATER EXPOSURE TO FLUCTUATIONS
IN FOREIGN EXCHANGE RATES, WHICH COULD HARM ITS FINANCIAL CONDITION
Currently, ASM Lithography's sales and expenses are both predominantly
denominated in euros. However, the merger will cause sales and expenses
denominated in currencies other than euros, particularly the dollar, to
increase. As a result, exchange rate fluctuations in the euro against other
currencies could also have an adverse effect on ASM Lithography's business,
operating results or financial condition. ASM Lithography has not yet undertaken
hedging activities to mitigate this risk.
ASM LITHOGRAPHY MAY NOT CONTINUE TO RECEIVE RESEARCH AND DEVELOPMENT SUBSIDIES
AND CREDITS
ASM Lithography receives research and development subsidies and credits
under European Union technology subsidy programs and similar programs of The
Netherlands Ministry of Economic Affairs. These programs have been important in
providing funding for development of new products. In 1999, ASM Lithography
received approximately Euro 36.1 million from these programs. ASM Lithography
will receive lower research and development credits in 2000. The level of these
subsidies and credits in future years may decline further as the criteria for
grants are subject to the priorities set from time to time by the funding
agencies.
THE PRICE OF ASM LITHOGRAPHY'S ORDINARY SHARES IS VERY VOLATILE
The current market price of the ordinary shares may not be indicative of
prices that will prevail in the trading market in the future. In particular,
since ASM Lithography's March 1995 initial public offering, the market price of
the ordinary shares has experienced significant appreciation, as have price
levels for equity securities generally and price levels for equity securities of
companies associated with the semiconductor industry and other high technology
fields. In addition, since ASM Lithography's initial public offering, the market
price of the ordinary shares has experienced significant fluctuation, including
fluctuation that is unrelated to ASM Lithography's performance. ASM Lithography
expects that this fluctuation will recur in the future.
THERE ARE MATERIAL DIFFERENCES BETWEEN THE RIGHTS OF SILICON VALLEY GROUP
STOCKHOLDERS AND ASM LITHOGRAPHY ORDINARY SHAREHOLDERS
The rights of Silicon Valley Group stockholders are currently governed by
Delaware corporate law and Silicon Valley Group's restated certificate of
incorporation and by-laws. Upon completion of the merger, Silicon Valley Group
stockholders will become shareholders of ASM Lithography and their rights as ASM
Lithography shareholders will be governed by Dutch corporate law and ASM
Lithography's articles of association. Silicon Valley Group stockholders
generally have greater power to influence material corporate transactions than
ASM Lithography ordinary shareholders. Accordingly, the rights of Silicon Valley
Group stockholders will significantly change upon completion of the merger.
Certain differences arise because of the existence of ASM Lithography's priority
shares. Although the priority shareholders do not have the authority to direct
ASM Lithography to take a particular action, their approval is required prior to
the ordinary shareholders taking certain actions, including the winding up of
ASM Lithography, certain issuances of shares, the amendment of its articles of
association and the payment of dividends out of share premium reserves. In
addition, ASM Lithography may not distribute interim dividends without the prior
approval of the priority shareholders. Moreover, Silicon Valley Group
stockholders have the right to elect directors to serve on the board of
directors of Silicon Valley Group. In contrast, while ASM Lithography
shareholders may recommend persons to serve as members, they do not vote to
elect the members of the
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ASM Lithography supervisory board. Instead, the members of the supervisory board
are appointed by the other members of the supervisory board. While ASM
Lithography's ordinary shareholders may appoint proxies to vote on their behalf
at general meetings, ASM Lithography is not required by Dutch law or practice to
solicit proxies and generally does not do so. For a more detailed description of
these and other differences see "Comparison of Rights of ASM Lithography
Shareholders and Silicon Valley Group Stockholders" on page 77.
AFTER THE MERGER, SILICON VALLEY STOCKHOLDERS MAY FIND IT DIFFICULT TO BRING
SUIT AGAINST ASM LITHOGRAPHY OR MEMBERS OF ITS SUPERVISORY BOARD OR BOARD OF
MANAGEMENT
ASM Lithography's ordinary shareholders may find it difficult to effect
service of process within the United States upon ASM Lithography or the members
of its board of management and supervisory board or to enforce against ASM
Lithography or such persons judgments of United States courts based upon civil
liabilities under the United States federal securities laws. Currently, it is
the accepted practice for a court in The Netherlands to give binding effect to a
final, definite judgment that has been rendered in the United States, unless
such judgment contravenes Dutch public policy or an existing Dutch judgment.
Notwithstanding the foregoing, there can be no assurance that United States
investors will be able to enforce against ASM Lithography, or members of its
board of management or supervisory board, any judgments in civil and commercial
matters, including judgments under the federal securities laws. Moreover, there
is doubt as to whether a Dutch court would impose civil liability on ASM
Lithography or the members of the board of management or supervisory board in an
original action based solely upon the federal securities laws of the United
States brought in a court of competent jurisdiction in The Netherlands against
ASM Lithography or such members. For a more detailed description, see
"Enforceability of Civil Liabilities" on page 105.
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THE SPECIAL MEETING OF SILICON VALLEY GROUP STOCKHOLDERS
PROXY STATEMENT-PROSPECTUS
This proxy statement-prospectus is being furnished to you in connection
with the solicitation of proxies by Silicon Valley Group's board of directors to
vote at the special meeting, in connection with our proposed merger.
This proxy statement-prospectus was first mailed to stockholders of Silicon
Valley Group on or about December 28, 2000.
DATE, TIME AND PLACE OF THE SPECIAL MEETING
The special meeting of stockholders of Silicon Valley Group is scheduled to
be held as follows:
Wednesday, February 7, 2001
10:00 a.m., Pacific Standard time
2240 Ringwood Avenue San Jose, California 95131
PURPOSE OF THE SPECIAL MEETING
The special meeting is being held so that stockholders of Silicon Valley
Group may consider and vote upon a proposal to adopt the Agreement and Plan of
Merger, dated as of October 1, 2000, by and among ASM Lithography, ALMA Holding,
Inc., ALMA (Merger), Inc., and Silicon Valley Group. Adoption of the merger
agreement will also constitute approval of the merger and the other transactions
contemplated by the merger agreement. If any other matters are properly
presented at the special meeting, the persons named in the enclosed form of
proxy will have the discretion to vote on those matters in accordance with their
best judgment. Silicon Valley Group is not aware of any matters that will be
presented at the special meeting other than the adoption and approval of the
merger agreement.
If the stockholders of Silicon Valley Group adopt the merger agreement and
the other conditions to the merger agreement are satisfied or waived, Silicon
Valley Group will be merged with a subsidiary of ASM Lithography and Silicon
Valley Group will become an indirect wholly-owned subsidiary of ASM Lithography.
You will receive 1.286 ASM Lithography ordinary shares for each share of Silicon
Valley Group common stock you hold.
STOCKHOLDER RECORD DATE FOR THE SPECIAL MEETING
Silicon Valley Group's board of directors has fixed the close of business
on December 20, 2000 as the record date for determination of Silicon Valley
Group stockholders entitled to notice of and to vote at the special meeting. As
of the record date, there were 34,826,388 shares of Silicon Valley Group common
stock outstanding, held by approximately 734 holders of record.
VOTE OF SILICON VALLEY GROUP STOCKHOLDERS REQUIRED FOR ADOPTION OF THE MERGER
AGREEMENT
A majority of the outstanding shares of Silicon Valley Group common stock
entitled to vote at the special meeting must be represented, either in person or
by proxy, to constitute a quorum at the special meeting. The affirmative vote of
the holders of at least a majority of Silicon Valley Group's common stock
outstanding and entitled to vote at the special meeting is required to adopt the
merger agreement. You are entitled to one vote for each share of Silicon Valley
Group common stock held by you on the record date on each proposal to be
presented to stockholders at the special meeting.
SECURITY OWNERSHIP OF MANAGEMENT
As of the record date for the special meeting, directors and executive
officers of Silicon Valley Group and their affiliates beneficially owned
approximately 1,914,986 shares of Silicon Valley Group common
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stock which represented approximately 5.29% of all outstanding shares of Silicon
Valley Group common stock entitled to vote at the special meeting.
PROXIES
To vote your proxy, mark, sign and date your proxy card and return it in
the postage-paid envelope provided with this proxy statement-prospectus.
All shares of Silicon Valley Group common stock represented by properly
executed proxies received before or at the special meeting will, unless the
proxies are revoked, be voted in accordance with the instructions indicated
thereon. If no instructions are indicated on a properly executed proxy, the
shares will be voted FOR adoption of the merger agreement. You are urged to mark
the box on the proxy to indicate how to vote your shares.
If a properly executed proxy is returned and the stockholder has abstained
from voting on adoption of the merger agreement, the Silicon Valley Group common
stock represented by the proxy will be considered present at the special meeting
for purposes of determining a quorum and for purposes of calculating the vote,
but will not be considered to have been voted in favor of adoption of the merger
agreement. Similarly, if an executed proxy is returned by a broker holding
shares of Silicon Valley Group common stock in street name that indicates that
the broker does not have discretionary authority to vote on adoption of the
merger agreement, the shares will be considered present at the meeting for
purposes of determining the presence of a quorum and of calculating the vote,
but will not be considered to have been voted in favor of adoption of the merger
agreement. Your broker will vote your shares only if you provide instructions on
how to vote by following the information provided to you by your broker.
Because adoption of the merger agreement requires the affirmative vote of
at least a majority of Silicon Valley Group's common stock outstanding as of the
record date, abstentions, failures to vote and broker non-votes will have the
same effect as a vote against adoption of the merger agreement.
ADJOURNMENTS
The enclosed proxy contains a proposal to adjourn the special meeting, if
necessary, for the purpose of soliciting additional proxies to adopt the merger
agreement. Any adjournment of the special meeting may be made by approval of the
holders of a majority of the outstanding shares of Silicon Valley Group common
stock present in person or represented by proxy at the special meeting, whether
or not a quorum exists. If no instructions are indicated on a properly executed
proxy, the shares will be voted FOR adjournment of the special meeting to
provide additional time to solicit votes to approve the merger agreement. If a
properly executed proxy is returned and the stockholder has abstained from
voting on adjournment of the special meeting, the Silicon Valley Group common
stock represented by the proxy will be considered present at the special meeting
for purposes of calculating the vote, but will not be considered to have been
voted in favor of adjournment of the special meeting. Similarly, if an executed
proxy is returned by a broker holding shares of Silicon Valley Group common
stock in street name that indicates that the broker does not have discretionary
authority to vote on adjournment, the shares will be considered present at the
meeting for purposes of calculating the vote, but will not be considered to have
been voted in favor of adjournment. Your broker will vote your shares only if
you provide instructions on how to vote by following the information provided to
you by your broker. Because adoption of the proposal to adjourn the special
meeting requires the affirmative vote of a majority of Silicon Valley Group's
common stock represented in person or by proxy at the special meeting,
abstentions and broker non-votes will have the same effect as a vote against
adjournment of the special meeting. Unless otherwise revoked, proxies will
remain valid following such adjournment for up to three years.
REVOCATION
You may revoke your proxy by notifying in writing the Secretary of Silicon
Valley Group at 101 Metro Drive, Suite 400, San Jose, California 95110 prior to
the time it is voted.
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You may change your vote at any time before it is voted by:
- granting a subsequent proxy
- appearing in person and voting at the special meeting
In order to vote in person at the special meeting, stockholders must attend
the meeting and cast their votes in accordance with the voting provisions
established for the meeting. Attendance at the special meeting without voting in
accordance with the voting procedures will not in and of itself revoke a proxy.
Any written notice of revocation either must be delivered at the special meeting
or must be sent in time to be received before the day of the special meeting to:
Silicon Valley Group, Inc.
101 Metro Drive, Suite 400
San Jose, CA 95110
Facsimile: 1-408-467-5955
Attention: Secretary
ASM Lithography and Silicon Valley Group will equally share the expenses
incurred in connection with the printing and mailing of this proxy
statement-prospectus. Silicon Valley Group has retained ChaseMellon Shareholder
Services, L.L.C., at an estimated cost of $5,000 plus reimbursement of expenses,
to assist in the solicitation of proxies. Silicon Valley Group and ChaseMellon
Shareholder Services will also request banks, brokers and other intermediaries
holding shares beneficially owned by others to send this proxy
statement-prospectus to and obtain proxies from the beneficial owners and will
reimburse the holders for their reasonable expenses in so doing.
YOU SHOULD NOT SEND IN ANY STOCK CERTIFICATES WITH YOUR PROXIES. A
TRANSMITTAL FORM WITH INSTRUCTIONS FOR THE SURRENDER OF STOCK CERTIFICATES FOR
SILICON VALLEY GROUP COMMON STOCK WILL BE MAILED TO YOU AS SOON AS PRACTICABLE
AFTER COMPLETION OF THE MERGER.
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THE MERGER
This section of the proxy statement-prospectus describes material aspects
of the proposed merger, including the merger agreement. While we believe that
the description covers the material terms of the merger and the related
transactions, this summary may not contain all of the information that is
important to you. You should read this entire document and the other documents
we refer to, including the merger agreement, carefully for a more complete
understanding of the merger.
BACKGROUND OF THE MERGER
Periodically from 1994 to 1998, representatives of Silicon Valley Group and
ASM Lithography held various discussions regarding possible strategic
combinations of all of or a part of the two companies.
In the early months of 1999, Silicon Valley Group's board of directors and
executive officers held numerous internal discussions outlining strategies that
would enable Silicon Valley Group to increase stockholder value, including
increased efforts to consider possible strategic combinations. As a result,
Silicon Valley Group engaged Credit Suisse First Boston as its financial advisor
to advise Silicon Valley Group about strategic opportunities.
On August 18, 1999, representatives of Credit Suisse First Boston discussed
with Silicon Valley Group's board of directors meetings they had held at the
board's direction with other companies and financial institutions that could be
interested in a strategic relationship with Silicon Valley Group.
On September 24, 1999, ASM Lithography, one of these companies, entered
into a confidentiality agreement with Silicon Valley Group, which has not been
terminated.
On September 27, 1999, Doug J. Dunn, Chief Executive Officer of ASM
Lithography, Papken Der Torossian, Chief Executive Officer of Silicon Valley
Group, John Shamaly, President of Silicon Valley Group's lithography division,
and Dr. Michael Attardo, a member of Silicon Valley Group's board of directors,
met in Veldhoven, The Netherlands to discuss potential synergies that would
result from a combination of the two companies.
On October 20, 1999, Mr. Dunn notified Mr. Der Torossian that ASM
Lithography was not prepared to pursue further discussions at that time. This
reflected a decision by ASM Lithography's management to focus its principal
attention on ramping up production in response to the accelerated upturn in the
semiconductor industry that occurred during the second half of 1999. In
addition, in light of the changes to ASM Lithography's management earlier in
1999, with Mr. Dunn joining the Board of Management in April and Peter Wennink
being appointed Chief Financial Officer in July, ASM Lithography's management
had decided to review the company's long-term strategy with respect to growth.
This review resulted in ASM Lithography's announcement, in its annual report for
1999, that its business strategy would include expanding operational flexibility
in research and manufacturing by reinforcing strategic alliances with
world-class partners.
On February 23, 2000, at a regularly scheduled meeting of Silicon Valley
Group's board of directors, Mr. Der Torossian gave the board a status report on
discussions with three potentially interested strategic partners, including ASM
Lithography.
On July 18, 2000, Mr. Dunn contacted Mr. Der Torossian to reinitiate
discussions regarding a proposed strategic combination of ASM Lithography and
Silicon Valley Group. This reflected the belief of ASM Lithography's management
that, in light of earlier discussions, Silicon Valley Group would have a
continuing interest in such a combination and that such a combination
potentially would be consistent with ASM Lithography's refined growth strategy.
On July 27, 2000, Mr. Dunn and Peter Wennink, Chief Financial Officer of
ASM Lithography, met with Mr. Weinstock and Dr. Attardo in San Francisco,
California to discuss ASM Lithography's renewed interest in a strategic
combination with Silicon Valley Group.
On August 1, 2000, at a regularly scheduled meeting of the Silicon Valley
Group board of directors, representatives of Silicon Valley Group's financial
advisor reviewed with the board the status of discussions with the other
parties, including ASM Lithography, regarding potential strategic relationships.
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On August 10, 2000, Mr. Der Torossian, William Hightower, President and
Chief Operating Officer of Silicon Valley Group, and Mr. Weinstock met with Mr.
Dunn and Mr. Wennink in New York to discuss Silicon Valley Group's operations,
technology and financial performance. At this time, Silicon Valley Group and ASM
Lithography entered into a new confidentiality agreement, which has not been
terminated.
On August 21, 2000, Mr. Der Torossian received a letter from Mr. Dunn
outlining the terms of a proposed stock-for-stock merger of the two companies.
The parties did not negotiate the terms of the merger at this time.
On August 24, 2000, senior management of Silicon Valley Group, along with
their financial advisors, reviewed ASM Lithography's proposal to acquire Silicon
Valley Group in a stock-for-stock transaction with the Silicon Valley Group
board of directors. The review included a discussion of the other potential
acquirors that had been previously contacted by Silicon Valley Group's financial
advisor. After discussing with its financial advisor the level of interest from
such companies in pursuing further discussions, the Silicon Valley Group board
of directors concluded that no other transactions were viable at that time.
Silicon Valley Group's board of directors authorized management to proceed with
negotiations on the basis outlined in ASM Lithography's proposal, reserving
final approval of the specific terms.
On August 30, 2000, representatives of Silicon Valley Group's financial
advisor gave the board of Silicon Valley Group an update on the status of
discussions with ASM Lithography. They also discussed ASM Lithography's business
and the expected synergies and potential risks of the proposed transaction with
the board of directors of Silicon Valley Group. Silicon Valley Group's board of
directors instructed its management and financial advisor to continue
negotiations pursuant to the terms proposed at the board meeting.
During August 2000, ASM Lithography's and Silicon Valley Group's financial
advisors held a number of discussions regarding the financial terms of the
proposed transaction.
During September 2000, the management of Silicon Valley Group and ASM
Lithography, along with their legal and financial advisors, conducted mutual due
diligence. The parties also continued to negotiate the terms of a merger
agreement.
On September 20, 2000, representatives from ASM Lithography's and Silicon
Valley Group's financial advisors again met to discuss the financial terms of
the proposed transaction.
On September 21, 2000, Silicon Valley Group's board of directors discussed
with its financial and legal advisors the status of negotiations, the
preliminary results of the due diligence process, both companies' current stock
prices and other factors bearing on the ASM Lithography proposal.
On September 24 and 25, 2000, Silicon Valley Group senior executives met
with ASM Lithography senior executives in Amsterdam, The Netherlands, to discuss
the proposed acquisition and review information pertaining to ASM Lithography's
business, technology, financial performance and marketing and sales capabilities
and to tour ASM Lithography's facilities.
On September 29, 2000, the board of management, the supervisory board and
the holders of priority shares of ASM Lithography passed resolutions authorizing
the issuance of shares in connection with the merger.
On September 30, 2000, Silicon Valley Group's board of directors held a
telephonic meeting with Silicon Valley Group's senior management team and its
legal counsel and financial advisor to review the principal terms of the
proposed merger. Representatives of Credit Suisse First Boston reviewed the
financial terms of the transaction and the related financial analyses. The board
of directors of Silicon Valley Group discussed the strategic value, expected
synergies and potential risks of the transaction, as well as its prospects for
continuing as a stand-alone company. Also at this meeting, Credit Suisse First
Boston rendered to Silicon Valley Group's board of directors its oral opinion,
subsequently confirmed by delivery of a written opinion dated as of October 1,
2000, the date of the merger agreement, to the effect that, as of the date of
the opinion and based on and subject to the matters described in the opinion,
the exchange ratio was fair, from a financial point of view, to the holders of
Silicon Valley Group common stock. Representatives from Silicon Valley Group's
legal counsel, Wilson Sonsini Goodrich & Rosati,
33
<PAGE> 40
Professional Corporation, reviewed the principal terms of the proposed merger
agreement and affiliate agreements with the board of directors and advised the
members of the board of their fiduciary duties in considering whether to approve
the transaction. After full discussion, Silicon Valley Group's board of
directors unanimously approved the merger agreement and resolved to recommend
that the Silicon Valley Group stockholders adopt the merger agreement.
On October 1, 2000, Silicon Valley Group's management, and its legal and
financial advisors, met with representatives of ASM Lithography and its legal
counsel in New York to finalize the merger agreement. A definitive merger
agreement was negotiated and executed by all parties.
On the morning of October 2, 2000, Silicon Valley Group and ASM Lithography
made a joint public announcement of the transaction.
JOINT REASONS FOR THE MERGER
ASM Lithography's board of management and supervisory board and Silicon
Valley Group's board of directors have determined that the combined company
following the merger would have the potential to realize long-term improved
operating and financial results and a stronger competitive position. ASM
Lithography's board of management and supervisory board and Silicon Valley
Group's board of directors have identified additional potential mutual benefits
of the merger that they believe will contribute to the success of the combined
company. These potential benefits include the following:
- the joint research and development effort of the two companies will
enable the combined company to benefit from significant future research
and development investments and accelerate the development of next
generation technology
- the expansion of customer base
- the expansion of product offerings
- minimal customer overlap will result in strong revenue synergies
SILICON VALLEY GROUP'S REASONS FOR THE MERGER
The decision of the Silicon Valley Group board of directors to enter into
the merger agreement with ASM Lithography and to recommend that the Silicon
Valley Group stockholders adopt the merger agreement was the result of careful
consideration by the Silicon Valley Group board of directors of a range of
strategic alternatives, including potential business combinations with companies
other than ASM Lithography, and the pursuit of a long-term independent business
strategy for Silicon Valley Group. The Silicon Valley Group board of directors
also consulted with Silicon Valley Group's management, as well as its legal and
financial advisors, throughout the period it was considering the merger.
During the course of its deliberations, Silicon Valley Group's board of
directors considered a number of factors that the board believes make the merger
attractive to Silicon Valley Group's stockholders and could contribute to the
success of the combined company, including the following:
- the potential benefits described above under the heading "Joint Reasons
for the Merger," which the board of directors believes could, overall,
create a stronger more sustainable business
- historical information concerning ASM Lithography's and Silicon Valley
Group's respective businesses, financial performance and condition,
operations, technology, management and competitive position, including
public reports concerning results of operations during the most recent
fiscal year and interim period each company filed with the Securities and
Exchange Commission, which, based upon the overall relative strength of
ASM Lithography compared to Silicon Valley Group, led the board of
directors to believe that Silicon Valley Group's stockholders would
benefit from the combined company as opposed to remaining an independent
company
- Silicon Valley Group management's view as to the financial condition,
results of operations and businesses of ASM Lithography and Silicon
Valley Group before and after giving effect to the
34
<PAGE> 41
merger based on management due diligence and publicly available earnings
estimates, which resulted in the board of directors' belief that the
combined entity could have a stronger technical, financial and market
position than an independent Silicon Valley Group
- current financial market conditions and historical market prices,
volatility and trading information with respect to ASM Lithography
ordinary shares and Silicon Valley Group common stock, which led the
board of directors to believe that, given the market leadership and
financial strength of ASM Lithography, as compared to Silicon Valley
Group, the ASM Lithography ordinary shares possessed a potentially higher
value then the Silicon Valley Group common stock
- the consideration to be received by Silicon Valley Group stockholders in
the merger and an analysis of the market value of the ASM Lithography
ordinary shares to be issued in exchange for each share of Silicon Valley
Group common stock in light of comparable merger transactions, which,
after giving consideration to the opinion of Credit Suisse First Boston
and the relative market strength of ASM Lithography, and when compared to
the premiums paid in comparable transactions, led the board of directors
to believe that the consideration to be received in the merger
represented a fair value for Silicon Valley Group's common stock
- the belief that the terms of the merger agreement, including the parties'
representations, warranties and covenants, and the conditions to the
parties' respective obligations, are reasonable, and that as a result of
the reasonableness of the terms, including the limited circumstances
under which ASM Lithography could abandon the merger and the fairness of
the consideration, the transaction could benefit Silicon Valley Group's
stockholders
- Silicon Valley Group management's view as to the prospects of Silicon
Valley Group as an independent company, and the benefits of being such,
which after a review of the market positions of Silicon Valley Group's
major competitors, the concentration of Silicon Valley Group's customer
base and, the need to continue investing heavily in research and
development, were believed by the board of directors to be less desirable
than those derived from the proposed combination
- Silicon Valley Group management's view as to the potential for other
third parties to enter into strategic relationships with or to acquire
Silicon Valley Group, which the board of directors believed was remote
given the limited number of potential acquirors and the lack of
significant interest from other potential acquirors contacted by Credit
Suisse First Boston
- the financial presentation of Credit Suisse First Boston, including its
opinion to the Silicon Valley Group board as to the fairness, from a
financial point of view, of the exchange ratio provided for in the merger
to the holders of Silicon Valley Group common stock, which led the board
of directors to conclude that the exchange ratio was equal to or greater
than the high-end average of implied exchange ratios for similar
transactions and that the average premium of the transaction was equal to
or greater than the median premium for similar transactions, and that,
therefore, the merger was fair and in the best interests of Silicon
Valley Group's stockholders
- the impact of the merger on Silicon Valley Group's customers and
employees, which the board of directors believes could be positive,
overall, based upon the creation of a stronger combined entity
- reports from management and legal and financial advisors as to the
results of their due diligence investigation of ASM Lithography and the
understanding by the board of directors of the relative strength of ASM
Lithography's legal, financial and market position compared with other
companies in the market
- increasing industry demand for Silicon Valley Group's products, which the
board of directors believes could benefit from ASM Lithography's customer
base and the increased sales and production capacity of the combined
company.
Silicon Valley Group's board of directors also considered the terms of the
merger agreement regarding Silicon Valley Group's rights to consider and
negotiate other strategic transaction proposals, as well as the possible effects
on such proposals of the provisions regarding termination fees. In addition,
Silicon Valley
35
<PAGE> 42
Group's board of directors noted that the merger is expected to be a tax-free
transaction and accounted for as a pooling of interests business combination.
Silicon Valley Group's board of directors also considered various alternatives
to the merger, including remaining as an independent company.
Silicon Valley Group's board of directors believed that these factors,
including the Silicon Valley Group board's review of the terms of the merger
agreement, supported the board's recommendation of the merger when viewed
together with the risks and potential benefits of the merger.
Silicon Valley Group's board of directors also identified and considered a
variety of potentially negative factors in its deliberations concerning the
merger, including, but not limited to:
- the risk that the potential benefits sought in the merger might not be
fully realized
- the risk that Silicon Valley Group is not permitted to "walk away" from
the merger or resolicit the vote of its stockholders because of changes
in the market price of ASM Lithography's ordinary shares
- the unavailability of an updated fairness opinion from Silicon Valley
Group's financial advisors in the event of a significant decline in the
market price of ASM Lithography's ordinary shares
- the possibility that the merger might not be completed and the effect of
the public announcement of the merger on:
- Silicon Valley Group's sales and operating results
- Silicon Valley Group's ability to attract and retain key management,
marketing and technical personnel
- progress of development projects
- the substantial costs to be incurred in connection with the merger,
including costs of integrating the businesses and transaction
expenses arising from the merger
- the risk that despite the efforts of the combined company, key
technical and management personnel might not remain employed by the
combined company
- the other risks described under the section entitled "Risk Factors"
on page 19 of this proxy statement-prospectus
Silicon Valley Group's board of directors believed that these risks were
outweighed by the potential benefits of the merger.
The foregoing discussion is not exhaustive of all factors considered by
Silicon Valley Group's board of directors.
Each member of Silicon Valley Group's board may have considered different
factors, and Silicon Valley Group's board evaluated these factors as a whole and
did not quantify or otherwise assign relative weights to factors considered.
RECOMMENDATION OF SILICON VALLEY GROUP'S BOARD OF DIRECTORS
SILICON VALLEY GROUP'S BOARD OF DIRECTORS BELIEVES THAT THE CURRENT
REDUCTION IN THE PREMIUM ORIGINALLY PAYABLE IN THIS TRANSACTION IS A RESULT OF
OVERALL MARKET CONDITIONS AND IS NOT INDICATIVE OF THE MARKET'S RECEPTIVENESS TO
THE TRANSACTION AS A WHOLE. IN LIGHT OF THESE MARKET CONDITIONS AND THE MIX OF
POSITIVE AND NEGATIVE FACTORS DISCUSSED IN THIS PROXY STATEMENT-PROSPECTUS UNDER
THE "REASONS FOR THE MERGER" THAT LED TO THE BOARD TO INITIALLY APPROVE THE
MERGER AGREEMENT, THE BOARD DID NOT BELIEVE IT APPROPRIATE OR CUSTOMARY TO
OBTAIN AN ADDITIONAL FAIRNESS OPINION FROM ITS FINANCIAL ADVISOR IN CONNECTION
WITH THE MERGER TO AUGMENT OR SUPPLEMENT THE FAIRNESS OPINION GIVEN AT THE TIME
THE MERGER AGREEMENT WAS ENTERED INTO. THE BOARD OF DIRECTORS BELIEVES THE
MERGER TO BE ADVISABLE AND IN THE BEST INTERESTS OF SILICON VALLEY GROUP AND ITS
STOCKHOLDERS, AND UNANIMOUSLY APPROVES THE MERGER AGREEMENT AND RECOMMENDS ITS
ADOPTION TO YOU.
36
<PAGE> 43
In considering the recommendation of the Silicon Valley Group board of
directors with respect to the merger agreement, you should be aware that certain
directors and officers of Silicon Valley Group have arrangements that cause them
to have certain interests in the merger that are different from, or are in
addition to, the interests of Silicon Valley Group stockholders generally.
Please see the section entitled "Interests of Certain Silicon Valley Group
Directors, Officers and Affiliates in the Merger" on page 44 of this proxy
statement-prospectus.
OPINION OF SILICON VALLEY GROUP'S FINANCIAL ADVISOR
Credit Suisse First Boston has acted as Silicon Valley Group's financial
advisor in connection with the merger. Silicon Valley Group selected Credit
Suisse First Boston based on Credit Suisse First Boston's experience, expertise
and reputation, and familiarity with Silicon Valley Group's business. Credit
Suisse First Boston is an internationally recognized investment banking firm and
is regularly engaged in the valuation of businesses and securities in connection
with mergers and acquisitions, leveraged buyouts, negotiated underwritings,
competitive biddings, secondary distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes.
In connection with Credit Suisse First Boston's engagement, Silicon Valley
Group requested that Credit Suisse First Boston evaluate the fairness, from a
financial point of view, to the holders of Silicon Valley Group common stock of
the exchange ratio provided for in the merger. On September 30, 2000, at a
meeting of the Silicon Valley Group board of directors held to evaluate the
merger, Credit Suisse First Boston rendered to the Silicon Valley Group board an
oral opinion, which was confirmed by delivery of a written opinion dated October
1, 2000, the date of the merger agreement, to the effect that, as of the date of
the opinion and based on and subject to the matters described in its opinion,
the exchange ratio was fair, from a financial point of view, to the holders of
Silicon Valley Group common stock. It should be understood that Credit Suisse
First Boston's opinion, dated October 1, 2000, to the board of directors speaks
as of that date and that Credit Suisse First Boston does not have any obligation
to update, revise or reaffirm its opinion, including at the time of the special
meeting of the stockholders.
THE FULL TEXT OF CREDIT SUISSE FIRST BOSTON'S WRITTEN OPINION DATED OCTOBER
1, 2000 TO THE SILICON VALLEY GROUP BOARD, WHICH SETS FORTH THE PROCEDURES
FOLLOWED, ASSUMPTIONS MADE, MATTERS CONSIDERED AND LIMITATIONS ON THE REVIEW
UNDERTAKEN, IS ATTACHED AS ANNEX B AND IS INCORPORATED INTO THIS DOCUMENT BY
REFERENCE. HOLDERS OF SILICON VALLEY GROUP COMMON STOCK ARE URGED TO READ THIS
OPINION CAREFULLY IN ITS ENTIRETY. CREDIT SUISSE FIRST BOSTON'S OPINION IS
ADDRESSED TO THE SILICON VALLEY GROUP BOARD AND RELATES ONLY TO THE FAIRNESS OF
THE EXCHANGE RATIO FROM A FINANCIAL POINT OF VIEW, DOES NOT ADDRESS ANY OTHER
ASPECT OF THE PROPOSED MERGER OR ANY RELATED TRANSACTION AND DOES NOT CONSTITUTE
A RECOMMENDATION TO ANY STOCKHOLDER AS TO ANY MATTER RELATING TO THE MERGER. THE
SUMMARY OF CREDIT SUISSE FIRST BOSTON'S OPINION IN THIS DOCUMENT IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO THE FULL TEXT OF THE OPINION.
In arriving at its opinion, Credit Suisse First Boston reviewed the merger
agreement, as well as publicly available business and financial information
relating to Silicon Valley Group and ASM Lithography. Credit Suisse First Boston
also reviewed other information relating to Silicon Valley Group and ASM
Lithography, including financial forecasts, which Silicon Valley Group and ASM
Lithography provided to or discussed with Credit Suisse First Boston, and met
with the managements of Silicon Valley Group and ASM Lithography to discuss the
businesses and prospects of Silicon Valley Group and ASM Lithography. Credit
Suisse First Boston also considered financial and stock market data of Silicon
Valley Group and ASM Lithography and compared those data with similar data for
other publicly held companies in businesses similar to Silicon Valley Group and
ASM Lithography and considered, to the extent publicly available, the financial
terms of other business combinations and other transactions recently announced
or completed. Credit Suisse First Boston also considered other information,
financial studies, analyses and investigations and financial, economic and
market criteria that it deemed relevant.
In connection with its review, Credit Suisse First Boston did not assume
any responsibility for independent verification of any of the information that
was provided to or otherwise reviewed by it and relied on that information being
complete and accurate in all material respects. With respect to financial
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<PAGE> 44
forecasts, Credit Suisse First Boston was advised, and assumed, that the
forecasts were reasonably prepared on bases reflecting the best currently
available estimates and judgments of Silicon Valley Group's and ASM
Lithography's managements as to the future financial performance of Silicon
Valley Group and ASM Lithography. In addition, Credit Suisse First Boston
relied, without independent verification, on the assessments of Silicon Valley
Group's and ASM Lithography's managements as to Silicon Valley Group's and ASM
Lithography's existing and future technology and products, the risks associated
with their technology and products and their ability to integrate Silicon Valley
Group's and ASM Lithography's businesses. Credit Suisse First Boston also
assumed, with Silicon Valley Group's consent, that the merger will be treated as
a tax-free reorganization for federal income tax purposes and as a pooling of
interests in accordance with generally accepted accounting principles.
Credit Suisse First Boston was not requested to, and did not, make an
independent evaluation or appraisal of Silicon Valley Group's and ASM
Lithography's assets or liabilities, contingent or otherwise, and was not
furnished with any evaluations or appraisals. Credit Suisse First Boston's
opinion was necessarily based on information available to, and financial,
economic, market and other conditions as they existed and could be evaluated by,
Credit Suisse First Boston on the date of its opinion. Credit Suisse First
Boston did not express any opinion as to what the actual value of ASM
Lithography ordinary shares will be when issued in the merger or the prices at
which ASM Lithography ordinary shares will trade after the merger. Although
Credit Suisse First Boston evaluated the exchange ratio from a financial point
of view, Credit Suisse First Boston was not requested to, and did not, recommend
the specific consideration payable in the merger, which consideration was
determined between Silicon Valley Group and ASM Lithography. Silicon Valley
Group imposed no other limitations on Credit Suisse First Boston with respect to
the investigations made or procedures followed in rendering its opinion.
In preparing its opinion to the Silicon Valley Group board, Credit Suisse
First Boston performed a variety of financial and comparative analyses,
including those described below. The summary of Credit Suisse First Boston's
analyses described below is not a complete description of the analyses
underlying Credit Suisse First Boston's opinion. The preparation of a fairness
opinion is a complex analytical process involving various determinations as to
the most appropriate and relevant methods of financial analyses and the
application of those methods to the particular circumstances and, therefore, a
fairness opinion is not readily susceptible to summary description. In arriving
at its opinion, Credit Suisse First Boston made qualitative judgments as to the
significance and relevance of each analysis and factor that it considered.
Accordingly, Credit Suisse First Boston believes that its analyses must be
considered as a whole and that selecting portions of its analyses and factors or
focusing on information presented in tabular format, without considering all
analyses and factors or the narrative description of the analyses, could create
a misleading or incomplete view of the processes underlying its analyses and
opinion.
In its analyses, Credit Suisse First Boston considered industry
performance, regulatory, general business, economic, market and financial
conditions and other matters, many of which are beyond the control of Silicon
Valley Group and ASM Lithography. No company, transaction or business used in
Credit Suisse First Boston's analyses as a comparison is identical to Silicon
Valley Group or ASM Lithography or the proposed merger, and an evaluation of the
results of those analyses is not entirely mathematical. Rather, the analyses
involve complex considerations and judgments concerning financial and operating
characteristics and other factors that could affect the acquisition, public
trading or other values of the companies, business segments or transactions
being analyzed. The estimates contained in Credit Suisse First Boston's analyses
and the ranges of valuations resulting from any particular analysis are not
necessarily indicative of actual values or predictive of future results or
values, which may be significantly more or less favorable than those suggested
by the analyses. In addition, analyses relating to the value of businesses or
securities do not purport to be appraisals or to reflect the prices at which
businesses or securities actually may be sold. Accordingly, Credit Suisse First
Boston's analyses and estimates are inherently subject to substantial
uncertainty.
Credit Suisse First Boston's opinion and financial analyses were only one
of many factors considered by the Silicon Valley Group board in its evaluation
of the proposed merger and should not be viewed as
38
<PAGE> 45
determinative of the views of the Silicon Valley Group board or management with
respect to the merger or the exchange ratio.
The following is a summary of the material analyses underlying Credit
Suisse First Boston's opinion dated October 1, 2000 delivered to the Silicon
Valley Group board in connection with the merger. THE FINANCIAL ANALYSES
SUMMARIZED BELOW INCLUDE INFORMATION PRESENTED IN TABULAR FORMAT. IN ORDER TO
FULLY UNDERSTAND CREDIT SUISSE FIRST BOSTON'S FINANCIAL ANALYSES, THE TABLES
MUST BE READ TOGETHER WITH THE TEXT OF EACH SUMMARY. THE TABLES ALONE DO NOT
CONSTITUTE A COMPLETE DESCRIPTION OF THE FINANCIAL ANALYSES. CONSIDERING THE
DATA SET FORTH IN THE TABLES BELOW WITHOUT CONSIDERING THE FULL NARRATIVE
DESCRIPTION OF THE FINANCIAL ANALYSES, INCLUDING THE METHODOLOGIES AND
ASSUMPTIONS UNDERLYING THE ANALYSES, COULD CREATE A MISLEADING OR INCOMPLETE
VIEW OF CREDIT SUISSE FIRST BOSTON'S FINANCIAL ANALYSES.
PEER GROUP COMPARISON. Credit Suisse First Boston compared financial,
operating and stock market data of Silicon Valley Group and ASM Lithography to
corresponding data of the following 15 publicly traded companies in the
semiconductor capital equipment industry and three publicly traded European
companies in the technology industry:
<TABLE>
<CAPTION>
EUROPEAN
TECHNOLOGY COMPANIES SEMICONDUCTOR CAPITAL EQUIPMENT COMPANIES
---------------------------------- ----------------------------------------------------------------------
MAJORS LITHOGRAPHY/PHOTOMASK
---------------------------------- ----------------------------------
<S> <C> <C>
- Alcatel S.A. - Applied Materials, Inc. - DuPont Photomasks Inc.
- ST Microelectronics NV - KLA-Tencor Corporation - Cymer, Inc.
- Infineon Technologies AG - Teradyne, Inc. - Photronics, Inc.
- Novellus Systems, Inc. - UltraTech Stepper, Inc.
- Lam Research Corporation
</TABLE>
<TABLE>
<CAPTION>
AUTOMATION THERMAL
---------------------------------- ----------------------------------
<S> <C> <C>
- Brooks Automation, Inc. - Axcelis Technologies, Inc.
- Asyst Technologies, Inc. - Mattson Technology, Inc.
- PRI Automation, Inc. - Varian Semiconductor
Equipment Associates, Inc.
</TABLE>
Credit Suisse First Boston compared stock prices as a multiple of estimated
calendar years 2000 and 2001 earnings per share and fully diluted aggregate
values, calculated as fully diluted equity market value plus net debt, as a
multiple of estimated calendar years 2000 and 2001 revenues. All multiples were
based on closing stock prices on September 28, 2000, the date two trading days
prior to public announcement of the merger. Based on the closing price of ASM
Lithography ordinary shares on September 28, 2000 of $33.81, the Silicon Valley
Group per share value implied by the exchange ratio in the merger is $43.48.
Estimated financial data for Silicon Valley Group, ASM Lithography and the
selected companies were based on research analysts' estimates. This analysis
indicated the following median implied multiples for
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<PAGE> 46
the selected companies and groups of companies, as compared to the implied
multiples for Silicon Valley Group, both on a stand-alone basis and pro forma
for the merger, and ASM Lithography:
<TABLE>
<CAPTION>
AGGREGATE
PRICE/EARNINGS VALUE/REVENUE
--------------------- ---------------------
ESTIMATED ESTIMATED ESTIMATED ESTIMATED
2000 2001 2000 2001
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Silicon Valley Group................................... 15.7x 11.5x 0.7x 0.6x
Silicon Valley Group-Merger............................ 29.8x 21.9x 1.6x 1.4x
ASM Lithography........................................ 50.6x 32.3x 8.3x 5.5x
Applied Materials, Inc................................. 24.7x 17.6x 5.2x 3.9x
KLA-Tencor Corporation................................. 25.8x 18.7x 5.3x 3.5x
European technology companies.......................... 36.5x 25.5x 6.5x 4.8x
Majors................................................. 21.6x 16.4x 4.4x 3.3x
Lithography/Photomask companies........................ 26.2x 16.4x 2.7x 2.1x
Automation companies................................... 18.5x 11.6x 1.2x 0.9x
Thermal companies...................................... 11.8x 8.4x 1.9x 1.5x
</TABLE>
TRANSACTION MULTIPLES ANALYSIS. Credit Suisse First Boston reviewed the
implied transaction multiples paid in the following merger and acquisition
transactions in the semiconductor capital equipment industry:
<TABLE>
<CAPTION>
ACQUIROR TARGET
--------------------------- ----------------------------------
<C> <S> <C>
- Applied Materials, Inc. Etec Systems, Inc.
- SpeedFam International, Integrated Process Equipment Corp.
Inc.
- Lam Research Corporation OnTrak Systems, Inc.
- KLA Instruments Corporation Tencor Instruments
</TABLE>
Credit Suisse First Boston compared aggregate values in the selected
transactions as a multiple of latest 12 months revenue and stock prices as a
multiple of latest 12 months and next 12 months earnings per share with the
corresponding multiples implied for Silicon Valley Group by the exchange ratio
in the merger. All multiples for the selected transactions were based on
information available at the time of the relevant transaction. Estimated
financial data for Silicon Valley Group and the selected transactions were based
on research analysts' estimates. This analysis indicated the following implied
multiples:
<TABLE>
<CAPTION>
AGGREGATE
VALUE/
REVENUE PRICE/EARNINGS
--------- -------------------
LATEST 12 LATEST 12 NEXT 12
MONTHS MONTHS MONTHS
--------- --------- -------
<S> <C> <C> <C>
Silicon Valley Group:
ASM Lithography September 28, 2000 closing price.......... 1.9x 47.1x 24.8x
ASM Lithography 30-day closing price...................... 2.1x 51.8x 27.3x
Applied Materials, Inc. / Etec Systems, Inc................. 8.8x NM 65.4x
SpeedFam International, Inc. / Integrated Process Equipment
Corp...................................................... 1.5x NM NM
Lam Research Corporation / Ontrak Systems, Inc.............. 3.0x 45.9x 74.7x
KLA Instruments Corporation / Tencor Instruments............ 2.8x 19.5x 26.0x
</TABLE>
Credit Suisse First Boston also reviewed the premiums paid in the selected
transactions to the closing stock prices for the relevant target one day and 30
days prior to public announcement of the transaction and to the high closing
stock price over the 12-month period prior to public announcement of the
40
<PAGE> 47
transaction. This analysis indicated the following results, as compared to the
premiums implied for Silicon Valley Group by the exchange ratio in the merger
over corresponding periods:
<TABLE>
<CAPTION>
IMPLIED PREMIUM
-----------------------------------------
LATEST 12
MONTHS
CURRENT PRICE 30-DAY PRICE HIGH PRICE
------------- ------------ ----------
<S> <C> <C> <C>
Silicon Valley Group:
ASM Lithography September 28, 2000 closing price......... 90.1 % 55.6% 30.8 %
ASM Lithography 30-day closing price..................... 109.0 % 71.2% 43.8 %
Applied Materials, Inc. / Etec Systems, Inc................ 65.3 % 131.9% 122.5 %
SpeedFam International, Inc. / Integrated Process Equipment
Corp..................................................... (2.9)% 108.5% (37.2)%
Lam Research Corporation / OnTrak Systems, Inc............. 14.3 % 59.7% 32.2 %
KLA Instruments Corporation / Tencor Instruments........... 34.0 % 69.4% 94.8 %
</TABLE>
Based on the closing price of ASM Lithography ordinary shares on September
28, 2000 of $33.81, the Silicon Valley Group per share value implied by the
exchange ratio in the merger is $43.48.
EXCHANGE RATIO ANALYSIS. Credit Suisse First Boston reviewed the average
of the ratios of the closing price of Silicon Valley Group common stock to the
closing price of ASM Lithography ordinary shares over various periods ending
September 28, 2000. Credit Suisse First Boston then computed the premium of the
exchange ratio in the merger to these ratios and the pro forma fully diluted
ownership of the Silicon Valley Group stockholders in the combined company
implied by these ratios. This analysis indicated the following:
<TABLE>
<CAPTION>
AVERAGE EXCHANGE PREMIUM IMPLIED IMPLIED SILICON VALLEY
PERIOD PRIOR TO RATIO OVER BY THE EXCHANGE RATIO GROUP FULLY DILUTED
SEPTEMBER 28, 2000 PERIOD IN THE MERGER OWNERSHIP PERCENTAGE
------------------ ---------------- --------------------- ----------------------
<S> <C> <C> <C>
Current market (on September 28,
2000)................................. 0.677x 90.1% 5.2%
10 trading days average................. 0.697x 84.4% 5.3%
30 trading days average................. 0.709x 81.4% 5.4%
60 trading days average................. 0.702x 83.1% 5.4%
90 trading days average................. 0.683x 88.3% 5.2%
180 trading days average................ 0.664x 93.8% 5.1%
Since January 4, 1999................... 0.709x 81.3% 5.4%
</TABLE>
Credit Suisse First Boston noted that the pro forma fully diluted ownership
of the Silicon Valley Group stockholders in the combined company implied by the
exchange ratio was 9.8%.
PREMIUMS PAID ANALYSIS. Credit Suisse First Boston analyzed the purchase
prices paid in the following four publicly announced stock-for-stock
transactions involving companies in the semiconductor capital equipment
industry:
<TABLE>
<CAPTION>
ACQUIROR TARGET
--------------------------- ----------------------------------
<C> <S> <C>
- Applied Materials, Inc. Etec Systems, Inc.
- SpeedFam International, Integrated Process Equipment Corp.
Inc.
- Lam Research Corporation OnTrak Systems, Inc.
- KLA Instruments Corporation Tencor Instruments
</TABLE>
Credit Suisse First Boston also reviewed the purchase prices paid in seven
stock-for-stock transactions in the semiconductor capital equipment industry
effected since January 14, 1997, 21 stock-for-stock transactions in the
semiconductor capital equipment industry effected since April 30, 1987, 88
stock-for-stock transactions with a transaction value in excess of $500 million
across a wide range of sectors within the technology industry effected since
July 5, 1994 and 199 stock-for-stock transactions across a wide range of sectors
within the technology industry effected since April 30, 1987.
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<PAGE> 48
The following table presents the premium reference range implied by the
exchange ratio provided for in each transaction or group of transactions to the
ratio of the stock prices for the acquirors and targets in the transactions one
trading day prior to public announcement of the transactions and the average
ratio of the stock prices for the acquirors and targets in the transactions over
various periods prior to public announcement of the transactions, as compared to
the premiums represented by the exchange ratio in the merger for corresponding
periods:
<TABLE>
<CAPTION>
PREMIUM REPRESENTED BY EXCHANGE
RATIO IN THE MERGER OVER AVERAGE
PERIOD PRIOR TO EXCHANGE RATIO RATIO OF SILICON VALLEY GROUP
ANNOUNCEMENT PREMIUM COMMON STOCK TO ASM
OF TRANSACTION RANGE LITHOGRAPHY ORDINARY SHARES
--------------- -------------- --------------------------------
HIGH LOW
<S> <C> <C> <C>
Current Market (on September 28, 2000).............. 65.3% (2.4)% 90.1%
10 trading days average............................. 77.2% 20.2% 84.4%
30 trading days average............................. 73.1% 18.0% 81.4%
60 trading days average............................. 62.0% 13.1% 83.1%
90 trading days average............................. 50.1% 16.0% 88.3%
120 trading days average............................ 42.1% 16.6% 85.6%
150 trading days average............................ 40.9% 14.5% 88.3%
180 trading days average............................ 38.5% 11.2% 93.8%
Latest 12 months.................................... 44.6% 10.7% 109.4%
Average of periods.................................. 51.9% 12.6% 89.0%
</TABLE>
DISCOUNTED CASH FLOW ANALYSIS. Credit Suisse First Boston estimated the
present value of the stand-alone, unlevered, after-tax free cash flows that
Silicon Valley Group could produce over fiscal years 2001 through 2004, based on
two scenarios. The first scenario, the management case, was based on internal
estimates of the management of Silicon Valley Group. The second scenario, the
alternate case, was based on adjustments to the management case discussed with
and reviewed by Silicon Valley Group management to reflect the potential for
reduced market share.
Credit Suisse First Boston calculated ranges of estimated terminal values
for Silicon Valley Group by multiplying estimated calendar year 2004 earnings by
multiples ranging from 10.0x to 14.0x. The estimated free cash flows and
terminal values for Silicon Valley Group were then discounted to present value
using discount rates of 14.0% to 18.0%, implying perpetuity growth rates of
12.7% to 17.1% for the management case and 16.3% to 21.2% for the alternate
case. This analysis indicated an implied Silicon Valley Group per share value
reference range of $52.18 to $74.06, for the management case, and $31.91 to
$46.85, for the alternate case, as compared to the price for Silicon Valley
Group common stock implied by the exchange ratio in the merger and based on the
closing price of ASM Lithography ordinary shares on September 28, 2000 of $43.48
per share.
Credit Suisse First Boston also conducted a discounted cash flow
sensitivity analysis based on the management case in order to examine the impact
on the implied value per share for Silicon Valley Group of a reduction in total
addressable market size by up to 30% and a reduction in Silicon Valley Group's
market share by up to 10%. This analysis indicated an implied Silicon Valley
Group per share value reference range of $23.79 to $60.93.
PRO FORMA EARNINGS IMPACT ANALYSIS. Credit Suisse First Boston analyzed
the potential pro forma effect of the merger on ASM Lithography's estimated
earnings per share for calendar years 2000 and 2001, based on research analysts'
estimates. Based on the exchange ratio in the merger of 1.286x, this analysis
indicated that the proposed merger could be accretive to ASM Lithography's
estimated pro forma earnings per share in calendar years 2000 and 2001. The
actual results achieved by the combined company may vary from projected results
and the variations may be material.
ILLUSTRATIVE TRADING ANALYSIS. In order to examine the impact of a
decrease in the combined company's estimated calendar year 2001 earnings
multiples, Credit Suisse First Boston computed the implied value per share of
Silicon Valley Group common stock on a stand-alone basis and on a pro forma
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<PAGE> 49
basis, assuming the merger is completed. In this analysis, Credit Suisse First
Boston utilized estimated calendar year 2001 earnings per share for the combined
company on a pro forma basis and applied a range of estimated calendar year 2001
earnings multiples not higher than the multiple implied by the market price per
share for ASM Lithography ordinary shares on September 28, 2000. This analysis
was performed based on research analysts' estimates. The results of this
analysis indicated an implied per share value reference range for Silicon Valley
Group common stock of $24.89 to $45.68, as compared to the price for Silicon
Valley Group common stock of $43.48 implied by the exchange ratio in the merger
based on the closing price of ASM Lithography's ordinary shares on September 28,
2000 of $33.81.
HISTORICAL STOCK PRICE ANALYSIS. Credit Suisse First Boston also analyzed
the prices at which Silicon Valley Group common stock traded over the period
from January 3, 2000 through September 28, 2000. Credit Suisse First Boston
noted that the high closing price for Silicon Valley Group common stock in the
period observed was $33.25 on July 17, 2000, and the low closing price for
Silicon Valley Group common stock in the period observed was $16.53 on January
6, 2000.
Credit Suisse First Boston analyzed the prices at which ASM Lithography
ordinary shares traded over the period from January 3, 2000 through September
28, 2000. Credit Suisse First Boston noted that the high closing price for ASM
Lithography ordinary shares in the period observed was $50.10 on March 3, 2000,
and the low closing price for ASM Lithography ordinary shares in the period
observed was $31.81 on September 26, 2000.
COMPARATIVE STOCK PRICE PERFORMANCE. Credit Suisse First Boston also
compared the recent stock price performance of each of Silicon Valley Group and
ASM Lithography with an index comprised of major companies in the semiconductor
capital equipment industry, including Applied Materials, Inc., KLA-Tencor
Corporation, Teradyne, Inc. and Novellus Systems, Inc., an index comprised of
companies in the lithography/photomask sector of the semiconductor industry,
including DuPont Photomasks Inc., Cymer, Inc., Photronics, Inc. and UltraTech
Stepper, Inc. and with ST Microelectronics and the Nasdaq composite index over
the period from September 27, 1999 through September 28, 2000. The results of
this analysis were as follows:
<TABLE>
<CAPTION>
INCREASE IN MARKET PRICE PER
COMPANY OR INDEX SHARE FROM 9/27/99 TO 9/28/00
---------------- -----------------------------
<S> <C>
Silicon Valley Group............................... 89.6%
ASM Lithography.................................... 51.5%
Majors index....................................... 51.8%
Lithography/photomask companies index.............. 8.2%
ST Microelectronics................................ 102.9%
NASDAQ composite index............................. 36.8%
</TABLE>
OTHER FACTORS. In the course of preparing its opinion, Credit Suisse First
Boston also reviewed and considered other information and data, including:
- the historical stock prices and trading characteristics for the last four
years of Silicon Valley Group common stock and ASM Lithography ordinary
shares; and
- selected research analysts' reports for Silicon Valley Group and ASM
Lithography, including stock or share price estimates for those analysts.
MISCELLANEOUS (INCLUDING FEES AND EXPENSES OF FINANCIAL ADVISOR). Silicon
Valley Group has agreed to pay Credit Suisse First Boston for its financial
advisory services customary fees based on the aggregate value of the merger,
which fees are currently estimated to be no greater than approximately
$11,000,000, of which no greater than approximately $7,500,000 is currently
estimated to be payable upon completion of the merger. Silicon Valley Group also
has agreed to reimburse Credit Suisse First Boston for its out-of-pocket
expenses, including fees and expenses of legal counsel and any other advisor
retained by Credit Suisse First Boston, and to indemnify Credit Suisse First
Boston and related parties against liabilities, including liabilities under the
federal securities laws, arising out of its engagement.
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<PAGE> 50
Credit Suisse First Boston and its affiliates have in the past provided
financial services to Silicon Valley Group and ASM Lithography unrelated to the
proposed merger, for which services Credit Suisse First Boston and its
affiliates have received compensation. During the past two years, Credit Suisse
First Boston has received fees totaling approximately $500,000 in the aggregate
for services rendered to ASM Lithography. In the ordinary course of business,
Credit Suisse First Boston and its affiliates may actively trade the debt and
equity securities of both Silicon Valley Group and ASM Lithography for their own
accounts and for the accounts of customers and, accordingly, may at any time
hold long or short positions in those securities.
INTERESTS OF CERTAIN SILICON VALLEY GROUP DIRECTORS, OFFICERS AND AFFILIATES IN
THE MERGER
As of the record date, directors and executive officers of Silicon Valley
Group and their affiliates beneficially owned approximately 5.29% of the
outstanding shares of Silicon Valley Group common stock. When considering the
recommendation of Silicon Valley Group's board of directors, you should be aware
that certain Silicon Valley Group directors and officers have certain
arrangements that cause them to have interests in the merger that are different
from, or are in addition to, yours.
SEPARATION AND CONSULTING AGREEMENTS. As of October 1, 2000, each of
Messrs. Papken S. Der Torossian, William A. Hightower and Russell G. Weinstock
entered into separation and consulting agreements with Silicon Valley Group.
During the term of these agreements, which become effective upon the completion
of the merger, these executives have agreed to assist in the integration of
Silicon Valley Group into ASM Lithography as well as to refrain from competing
in certain lines of business with the combined company. In exchange for the
consulting services, agreeing not to compete and in lieu of the severance
payments due to these executives under their employment agreements, these
executives are entitled to receive the following payments under these
agreements:
- Mr. Der Torossian will receive:
-- $7,842,690 upon completion of the merger
-- $1,680,580 on each of the first two anniversaries of the effective date
of the merger
-- 36 monthly payments of $30,000
-- payments of medical care premiums for Mr. Der Torossian and his
dependants until the earlier of: (i) the date that Mr. Der Torossian is
eligible for Medicare and (ii) his death
- Mr. Hightower will receive:
-- $3,637,980 upon completion of the merger
-- $779,570 on each of the first two anniversaries of the effective date
of the merger
-- 36 monthly payments of $20,000
- Mr. Weinstock will receive the following:
-- $1,657,840 upon completion of the merger
-- $335,970 on each of the first two anniversaries of the effective date
of the merger
-- 36 monthly payments of $15,000
-- payments of medical care premiums for Mr. Weinstock and his dependants
until the earlier of: (i) the date that Mr. Weinstock is eligible for
Medicare and (ii) his death.
EMPLOYMENT AGREEMENTS.
On June 7, 1999, Silicon Valley Group and Papken S. Der Torossian entered
into a first amended and restated employment agreement which provides that if
Mr. Der Torossian is terminated without cause,
44
<PAGE> 51
dies, is disabled or voluntarily terminates his employment after suffering a
material change in his location, salary, benefits or responsibilities, Mr. Der
Torossian will receive the following:
- a lump sum payment equal to 300% of his base compensation
- a lump sum payment equal to the greater of: (i) 300% of his aggregate
bonus and car allowance payable for the immediately preceding 12-month
period and (ii) 300% of the target bonus and car allowance paid to Mr.
Der Torossian in the immediately preceding fiscal year
- the right to exercise his vested options for 36 months following the date
of termination
If Mr. Der Torossian is terminated, with or without cause, within 12 months
following a change of control, he shall be entitled to:
- the payments set forth above
- the immediate vesting of all unvested options as of the date of
termination and Mr. Der Torossian shall have 36 months following such
date to exercise his options.
Mr. Der Torossian has agreed to forgo the payments set forth above, which amount
to $8,583,840, in partial consideration for the payments he will be entitled to
receive under the Severance and Consulting Agreements discussed above.
On June 7, 1999, Silicon Valley Group and William A. Hightower entered into
a first amended and restated employment agreement which provides that if Mr.
Hightower is terminated without cause, dies, is disabled or voluntarily
terminates his employment after suffering a material change in his location,
salary, benefits or responsibilities, Mr. Hightower will receive the following:
- a lump sum payment equal to 300% of his base compensation
- a lump sum payment equal to the greater of: (i) 300% of his aggregate
bonus and car allowance payable for the immediately preceding 12-month
period and (ii) 300% of the target bonus and car allowance paid to Mr.
Hightower in the immediately preceding fiscal year
- the right to exercise his vested options for 36 months following the date
of termination
If Mr. Hightower is terminated, with or without cause, within 12 months
following a change of control, he shall be entitled to:
- the payments set forth above
- the immediate vesting of all unvested options as of the date of
termination and Mr. Hightower shall have 36 months following such date to
exercise his options
Mr. Hightower has agreed to forgo the payments set forth above, which amount to
$4,017,120, in partial consideration for the payments he will be entitled to
receive under the Severance and Consulting Agreements discussed above.
On June 7, 1999, Silicon Valley Group and Russell G. Weinstock entered into
a first amended and restated employment agreement which provides that if Mr.
Weinstock is terminated without cause or voluntarily terminates his employment
after suffering a material change in his location, salary, benefits or
responsibilities, Mr. Weinstock will receive the following:
- a payment equal to 24 months of his base compensation
- the right to exercise his vested options for 24 months following the date
of termination
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<PAGE> 52
If Mr. Weinstock is terminated without cause and (A) such termination is within
12 months following a change of control or (B) a change of control occurs within
90 days following such termination, Mr. Weinstock shall be entitled to:
- the payments set forth above
- the immediate vesting of all unvested options as of the date of the
termination and Mr. Weinstock shall have 24 months following such date to
exercise his options
If Mr. Weinstock is terminated as a result of his death or disability, Mr.
Weinstock will receive a payment equal to 24 months of his base compensation,
which in the case of disability shall be offset by any payments received as a
result of disability insurance.
Mr. Hightower has agreed to forgo the payments set forth above, which amount to
$1,829,780, in partial consideration for the payments he will be entitled to
receive under the Severance and Consulting Agreements discussed above.
On June 7, 1999, Silicon Valley Group and Boris Lipkin, Corporate Vice
President of Silicon Valley Group, entered into a first amended and restated
employment agreement which provides that if Mr. Lipkin is terminated without
cause or voluntarily terminates his employment after suffering a material change
in his location, salary, benefits or responsibilities, Mr. Lipkin will receive
the following:
- a payment equal to 24 months of his base compensation, which is currently
$919,060
- the right to exercise his vested options for 24 months following the date
of termination
If Mr. Lipkin is terminated without cause and (A) such termination is within 12
months following a change of control or (B) a change of control occurs within 90
days following such termination, Mr. Lipkin shall be entitled to:
- the payments set forth above
- the immediate vesting of all unvested options as of the date of
termination and Mr. Lipkin shall have 24 months following such date to
exercise his options
If Mr. Lipkin is terminated as a result of his death or disability, Mr. Lipkin
will receive a payment equal to 24 months of his base compensation, which in the
case of disability shall be offset by any payments received as a result of
disability insurance.
On September 23, 1999, Silicon Valley Group and Jeffrey Kowalski, President
of Silicon Valley Group's Thermal Systems division, entered into a change of
control severance agreement which provides that if Mr. Kowalski is terminated
without cause, dies, suffers a disability or voluntarily terminates his
employment after suffering a material change in his location, salary, benefits
or responsibilities within 12 months following a change in control, Mr. Kowalski
will receive the following:
- a payment equal to 18 months of his base compensation and car allowance,
which are currently $312,000 and $13,200, respectively
- the acceleration of all options unvested as of the date of termination
On September 23, 1999, Silicon Valley Group and John Shamaly, President of
Silicon Valley Group's Lithography division, entered into a change of control
severance agreement. This agreement provides that if at any time during the 12
months following a change in control Mr. Shamaly is terminated without cause,
dies, suffers a disability or voluntarily terminates his employment after
suffering a material change in his location, salary, benefits or
responsibilities within 12 months following a change in control, Mr. Shamaly
will receive the following:
- a payment equal to 18 months of his base compensation and car allowance,
which are currently $310,000 and $13,200, respectively
- the acceleration of all options unvested as of the date of termination
46
<PAGE> 53
On September 23, 1999, Silicon Valley Group and Steven Jensen, Vice
President of Worldwide Sales and Service of Silicon Valley Group, entered into a
change of control severance agreement. This agreement provides that if at any
time during the 12 months following a change in control Mr. Jensen is terminated
without cause, dies, suffers a disability or voluntarily terminates his
employment after suffering a material change in his location, salary, benefits
or responsibilities within 12 months following a change in control, Mr. Jensen
will receive the following:
- a payment equal to 18 months of his base compensation and car allowance,
which are currently $290,000 and $13,200, respectively
- the acceleration of all options unvested as of the date of termination
COMMON STOCK EQUIVALENT AGREEMENTS. On July 15, 1997, Silicon Valley Group
and Nam P. Suh, William Martin and Lawrence Tomlinson (each directors of the
corporation) entered into common stock equivalent agreements pursuant to which
each director would receive 1,000 common stock equivalents which are
convertible, at no cost, into 1,000 shares of the common stock of Silicon Valley
Group upon the earlier of: (i) July 15, 2001 or (ii) the date upon which such
director dies, retires or his services shall terminate for any reason. Upon the
occurrence of the merger, each director will be entitled to receive 1,286 shares
of ASM Lithography ordinary shares in exchange for the 1,000 shares of common
stock received under the agreement.
DIRECTORS' AND OFFICERS' INSURANCE; INDEMNIFICATION. The merger agreement
provides that upon completion of the merger, Silicon Valley Group will indemnify
and hold harmless, and provide advancement of expenses to, all past and present
directors and officers of Silicon Valley Group and its subsidiaries for acts or
omissions occurring at or prior to the completion of the merger. In addition,
Silicon Valley Group's organizational documents will continue to provide
indemnification for the past and present directors and officers of Silicon
Valley Group and its subsidiaries to the fullest extent permitted by Delaware
law for a period of six years following the completion of the merger.
ASM Lithography will also be required to maintain for a period of not less
than six years after completion of the merger, either the current policies of
directors' and officers' liability insurance maintained by Silicon Valley Group
or comparable policies that cover claims arising from facts or events that
occurred on or before the completion of the merger. ASM Lithography, however,
will not be required to expend in any one year an amount in excess of 150% of
the annual premiums currently paid for such insurance.
As a result of the agreements and arrangements discussed in this section,
these directors and officers could be more likely to vote to approve the merger
agreement than if they did not hold these interests. Silicon Valley Group
stockholders should consider whether these interests may have influenced these
directors and officers to support or recommend the merger.
COMPLETION AND EFFECTIVENESS OF THE MERGER
The merger will be completed when all of the conditions to completion of
the merger are satisfied or waived, including adoption of the merger agreement
by the stockholders of Silicon Valley Group. The merger will become effective
upon the filing of a certificate of merger with the State of Delaware.
We are working towards completing the merger as quickly as possible. We
hope to complete the merger early in 2001.
STRUCTURE OF THE MERGER AND CONVERSION OF SILICON VALLEY GROUP COMMON STOCK
In accordance with the merger agreement and Delaware law, ALMA (Merger),
Inc., a newly-formed and wholly-owned subsidiary of ALMA Holding, Inc., itself a
wholly-owned subsidiary of ASM Lithography, will be merged with and into Silicon
Valley Group. As a result of the merger, the separate corporate existence of
ALMA (Merger), Inc. will cease and Silicon Valley Group will survive the merger
as an indirect wholly-owned subsidiary of ASM Lithography.
47
<PAGE> 54
Upon completion of the merger, each outstanding share of Silicon Valley
Group common stock, other than shares held by us and our subsidiaries, will be
converted into the right to receive 1.286 fully paid and nonassessable ASM
Lithography ordinary shares. The number of ASM Lithography ordinary shares
issuable in the merger will be proportionately adjusted for any additional
future share split, share dividend or similar event with respect to Silicon
Valley Group common stock or ASM Lithography ordinary shares effected between
the date of the merger agreement and the completion of the merger.
No certificate or scrip representing fractional ASM Lithography ordinary
shares will be issued in connection with the merger. Instead you will receive
cash, without interest, in lieu of a fraction of an ASM Lithography ordinary
share. The amount of cash is to be determined through the sale of the aggregated
fractional shares by an exchange agent. Promptly after the closing, the exchange
agent will sell the fractional shares as promptly as possible and distribute the
cash after paying all commissions, transfer taxes and other expenses incurred
through the sale of the aggregated fractional shares. Alternatively, ASM
Lithography has the right to choose to make payments directly to the Silicon
Valley Group stockholders instead of using an exchange agent. If ASM Lithography
were to exercise this option, each Silicon Valley Group common stockholder would
receive an amount determined by multiplying (A) the average of the last reported
sales prices of ASM Lithography ordinary shares, as reported on the NASDAQ
National Market, on each of the 5 trading days before the third trading day
prior to the consummation of the merger by (B) the fractional ASM Lithography
ordinary share to which such Silicon Valley Group common stockholder would
otherwise be entitled.
EXCHANGE OF SILICON VALLEY GROUP STOCK CERTIFICATES FOR ASM LITHOGRAPHY SHARE
CERTIFICATES
Promptly after the merger is completed, the exchange agent will mail to you
an executed letter of transmittal and instructions for use in surrendering your
Silicon Valley Group stock certificates in exchange for ASM Lithography share
certificates. When you deliver your Silicon Valley Group stock certificates to
the exchange agent along with a properly executed letter of transmittal and any
other required documents, your Silicon Valley Group stock certificates will be
canceled and you will receive ASM Lithography share certificates representing
the number of full ASM Lithography ordinary shares to which you are entitled
under the merger agreement.
You will receive payment in cash, without interest, in lieu of any
fractional ASM Lithography ordinary shares which would have been otherwise
issuable to you as a result of the merger.
YOU SHOULD NOT SUBMIT YOUR SILICON VALLEY GROUP STOCK CERTIFICATES FOR
EXCHANGE UNLESS AND UNTIL YOU RECEIVE THE TRANSMITTAL INSTRUCTIONS AND A FORM OF
LETTER OF TRANSMITTAL FROM THE EXCHANGE AGENT.
You are not entitled to receive any declared dividends or other
distributions on ASM Lithography ordinary shares until the merger is completed
and you have surrendered your Silicon Valley Group stock certificates in
exchange for ASM Lithography share certificates.
If there is any dividend or other distribution on ASM Lithography ordinary
shares with a record date after the merger and a payment date prior to the date
you surrender your Silicon Valley Group stock certificates in exchange for ASM
Lithography share certificates, you will receive it with respect to the whole
number of shares of ASM Lithography ordinary shares issued to you promptly after
they are issued. If there is any dividend or other distribution on ASM
Lithography ordinary shares with a record date after the merger and a payment
date after the date you surrender your Silicon Valley Group stock certificates
in exchange for ASM Lithography share certificates, you will receive it with
respect to the whole shares of ASM Lithography ordinary shares issued to you
promptly after the payment date.
ASM Lithography will issue an ASM Lithography share certificate or a check
in lieu of a fractional share in a name other than the name in which a
surrendered Silicon Valley Group stock certificate is registered only if you
present the exchange agent with all documents required to show and effect the
unrecorded transfer of ownership and show that you paid any applicable stock
transfer taxes.
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<PAGE> 55
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following discussion summarizes the opinions of Skadden, Arps, Slate,
Meagher & Flom LLP and Wilson Sonsini Goodrich & Rosati, Professional
Corporation as to the material federal income tax consequences of the merger. We
have filed the opinions with the Securities and Exchange Commission as exhibits
to the registration statement related to this proxy-statement-prospectus. The
discussion below under the heading "-- Certain United States Federal Income Tax
and The Netherlands Tax Consequences of Ownership of ASM Lithography Ordinary
Shares" also describes the material United States federal income tax
consequences of the ownership of ASM Lithography ordinary shares. The discussion
which follows is based on the Internal Revenue Code, Treasury Regulations
promulgated thereunder, administrative rulings and pronouncements and judicial
decisions as of the date of this proxy statement-prospectus, all of which are
subject to change, possibly with retroactive effect. In addition, the following
discussion also is based on the assumptions, limitations, representations and
covenants relevant to the discussion, including those contained in certificates
of officers of ASM Lithography and Silicon Valley Group expected to be executed
as of the completion of the merger.
The discussion below is for general information only and, except where
specifically noted, does not address the effects of any state, local or
non-United States tax laws. In addition, the discussion below relates to persons
who hold Silicon Valley Group common stock and will hold ASM Lithography
ordinary shares as capital assets. The tax treatment of a Silicon Valley Group
stockholder may vary depending upon such stockholder's particular situation, and
certain stockholders may be subject to special rules not discussed below. These
stockholders would include, for example:
- insurance companies
- tax-exempt organizations
- financial institutions
- broker-dealers
- shareholders who are foreign persons, and
- individuals who receive ASM Lithography ordinary shares pursuant to the
exercise of employee stock options or otherwise as compensation
In addition, this discussion does not address the tax consequences to any
Silicon Valley Group stockholder who will own 5% or more of either the total
voting power or the total value of the outstanding ASM Lithography ordinary
shares after the merger (determined after taking into account ownership under
the applicable attribution rules of the Internal Revenue Code) and non-U.S.
Holders (defined in the following paragraph) who have held more than 5% of the
Silicon Valley Group common stock at any time within the five-year period ending
at the completion of the merger.
As used in this section, a "U.S. Holder" means a holder of Silicon Valley
Group common stock who exchanges Silicon Valley Group common stock for ASM
Lithography ordinary shares that is, for United States federal income tax
purposes,
- a citizen or resident of the United States
- a corporation, partnership or other entity (other than a trust) created
or organized in or under the laws of the United States or any political
subdivision thereof
- an estate whose income is subject to United States federal income tax
regardless of its source or
- a trust if, in general, a court within the United States is able to
exercise primary supervision over its administration and one or more
United States persons have authority to control all of its substantial
decisions
As used in this section, a non-U.S. Holder is a holder of Silicon Valley
Group common stock that is not a U.S. Holder.
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<PAGE> 56
CONSEQUENCES OF THE MERGER. Completion of the merger is conditioned upon
the receipt by ASM Lithography of an opinion from Skadden, Arps, Slate, Meagher
& Flom LLP, its counsel, and by Silicon Valley Group of an opinion from Wilson
Sonsini Goodrich & Rosati, Professional Corporation, its counsel, to the effect
that
- the merger will constitute a reorganization within the meaning of Section
368 of the Internal Revenue Code
- Silicon Valley Group, ASM Lithography and ALMA Holding, Inc. will each be
a party to the reorganization and
- ASM Lithography will be treated as a corporation under Section 367(a) of
the Internal Revenue Code
These opinions of counsel are subject to certain assumptions and qualifications
and assume certain facts as to the completion of the merger and are based upon
certain representations as to factual matters made by ASM Lithography and
Silicon Valley Group. These representations, if incorrect in certain material
respects, could jeopardize the conclusions reached in the opinions. Neither ASM
Lithography nor Silicon Valley Group is currently aware of any facts or
circumstances that would cause any such representations made to counsel to be
untrue or incorrect in any material respect. Any opinion of counsel is not
binding on the Internal Revenue Service or the courts.
The qualification of the merger as a reorganization will result in the
following material United States federal income tax consequences:
- A Silicon Valley Group stockholder will not recognize any income, gain or
loss as a result of the receipt of ASM Lithography ordinary shares in
exchange for Silicon Valley Group common stock pursuant to the merger,
except for cash received in lieu of a fractional ASM Lithography ordinary
share.
- The tax basis of a Silicon Valley Group stockholder for the ASM
Lithography ordinary shares received pursuant to the merger, including
any fractional share interest in ASM Lithography ordinary shares for
which cash is received, will equal such Silicon Valley Group
stockholder's tax basis in the Silicon Valley Group common stock
exchanged therefor.
- The holding period of a Silicon Valley Group stockholder for the ASM
Lithography ordinary shares received pursuant to the merger will include
the holding period of the Silicon Valley Group common stock surrendered
in exchange therefor.
- A Silicon Valley Group stockholder that is a U.S. Holder and that
receives cash in lieu of a fractional share interest in ASM Lithography
ordinary shares pursuant to the merger will be treated as having received
such cash in exchange for such fractional share interest and generally
will recognize capital gain or loss on such deemed exchange in an amount
equal to the difference between the amount of cash received and the basis
of the Silicon Valley Group stock allocable to such fractional share. The
tax rate applicable to capital gains of an individual taxpayer will vary
depending on the taxpayer's holding period for its shares of Silicon
Valley Group common stock. In the case of an individual, any such capital
gain will be subject to a maximum federal income tax rate of 20% if the
individual's holding period for such shares was more than one year at the
completion of the merger. Gains on the sale of capital assets held for
one year or less by individuals are subject to tax at ordinary income
rates.
- No income, gain or loss will be recognized by ASM Lithography or Silicon
Valley Group or the other parties to the merger agreement solely as a
result of the merger.
To the extent ASM Lithography or Silicon Valley Group becomes aware of
facts or circumstances that would cause any of the representations made to tax
counsel to be untrue in any material respect and thus jeopardize the conclusions
reached in the tax opinions, Silicon Valley Group will resolicit proxies from
its stockholders if we intend to proceed with the merger.
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CERTAIN UNITED STATES FEDERAL INCOME TAX AND THE NETHERLANDS TAX CONSEQUENCES OF
OWNERSHIP OF ASM LITHOGRAPHY ORDINARY SHARES
- UNITED STATES TAXATION
TAXATION OF DIVIDENDS. U. S. Holders will include in gross income as
foreign-source dividend income the gross amount of any distribution (before
reduction for Netherlands withholding taxes) ASM Lithography makes out of its
current or accumulated earnings and profits (as determined for United States
federal income tax purposes) when the distribution is actually or constructively
received by the U. S. Holder. Distributions will not be eligible for the
dividends-received deduction generally allowed to United States corporations in
respect of dividends received from other United States corporations. The amount
of the dividend distribution includible in income of a U. S. Holder will be the
United States dollar value of the foreign currency (e.g., Dutch guilders or
euros) paid, determined by the spot rate of exchange on the date of the
distribution, regardless of whether the payment is in fact converted into United
States dollars. Generally, any gain or loss resulting from currency exchange
fluctuations during the period from the date the dividend payment is includible
in income to the date such payment is converted into United States dollars will
be treated as ordinary income or loss. The gain or loss will generally be income
from sources within the United States for United States foreign tax credit
purposes. Distributions in excess of current and accumulated earnings and
profits, as determined for United States federal income tax purposes, will be
treated as a non-taxable return of capital to the extent of the U.S. Holder's
basis in the ordinary shares of ASM Lithography and thereafter as taxable
capital gain. ASM Lithography does not maintain calculations of its earnings and
profits under United States federal income tax principles.
Subject to limitations provided in the Internal Revenue Code, a U.S. Holder
may generally deduct from its United States federal taxable income, or credit
against its United States federal income tax liability, the amount of any
Netherlands withholding taxes. Amounts paid in respect of ordinary shares of ASM
Lithography will be treated as "passive income" or, in the case of certain
holders, "financial services income" for purposes of calculating the amount of
the foreign tax credit available to a U.S. Holder. Netherlands withholding tax
may be deducted only if the U.S. Holder does not claim a credit for any
Netherlands or other foreign taxes paid or accrued in that year. In addition,
Netherlands dividend withholding taxes will likely not be creditable against the
U.S. Holder's United States tax liability to the extent ASM Lithography is not
required to pay over the amount withheld to The Netherlands Tax Administration.
Currently, a Netherlands corporation that receives dividends from qualifying
non-Netherlands subsidiaries may credit source country tax withheld from those
dividends against the Netherlands withholding tax imposed on a dividend paid by
a Netherlands corporation, up to a maximum of 3% of the dividend paid by the
Netherlands corporation. The credit reduces the amount of dividend withholding
that ASM Lithography is required to pay to The Netherlands Tax Administration,
but does not reduce the amount of tax ASM Lithography is required to withhold
from dividends.
TAXATION ON SALE OR OTHER DISPOSITION OF ORDINARY SHARES OF ASM
LITHOGRAPHY. Upon a sale or other disposition of ordinary shares of ASM
Lithography, a U.S. Holder will generally recognize gain or loss for United
States federal income tax purposes in an amount equal to the difference between
the amount realized, if paid in United States dollars, or the United States
dollar value of the amount realized if proceeds are paid in currency other than
the United States dollar, as the case may be, and the U.S. Holder's tax basis in
such ordinary shares of ASM Lithography. Generally, the capital gain or loss
will be long-term capital gain or loss if the holding period of the U.S. Holder
in the ordinary shares of ASM Lithography exceeds one year at the time of the
sale or other disposition. The deduction of capital losses is subject to
limitations for United States federal income tax purposes. Gain or loss from the
sale or other disposition of ordinary shares of ASM Lithography generally will
be treated as United States source income or loss for United States foreign tax
credit purposes and generally will be treated as "passive income" or, in the
case of certain holders, "financial services income" for purposes of calculating
the amount of the foreign tax credit available to a U.S. Holder. Each U.S.
Holder should consult its tax advisor with regard to the currency translation
rules applicable to its adjusted basis and/or the amount realized upon a sale or
other disposition of its ordinary shares of ASM Lithography if purchased in, or
sold or disposed of for, a currency other than United States dollars.
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INFORMATION REPORTING AND BACKUP WITHHOLDING. Payments in lieu of a
fractional share of ASM Lithography ordinary shares and payments in respect of
the ASM Lithography ordinary shares that are made in the United States or by a
United States related financial intermediary may be subject to information
reporting and backup withholding at a 31% rate unless you:
- are a corporation or other exempt recipient; or
- provide an IRS Form W-9 or an acceptable substitute form, certifying your
taxpayer identification number and that no loss of exemption from backup
withholding has occurred
If you are not a United States person, you generally are not subject to
these rules, but may be required to provide certification of non-United States
status in order to establish that you are exempt.
- NETHERLANDS TAXATION
The statements below represent a broad analysis of the present Netherlands
tax laws. The description is limited to the material tax implications for a
holder of ordinary shares of ASM Lithography who is not, or is not deemed to be,
a resident of The Netherlands for Netherlands tax purposes (a "Nonresident
Holder"). They do not address special rules that may apply to special classes of
holders of ordinary shares of ASM Lithography and are not to be read as
extending by implication to matters not specifically referred to herein. As to
individual tax consequences, each investor in ordinary shares of ASM Lithography
should consult his or her tax counsel.
WITHHOLDING TAX ON DIVIDENDS. In general, a dividend distributed by ASM
Lithography in respect of ordinary shares of ASM Lithography will be subject to
a withholding tax imposed by The Netherlands at a statutory rate of 25%.
Dividends include dividends in cash or in kind, deemed and constructive
dividends, repayments of paid-in capital not recognized as capital for
Netherlands dividend withholding tax purposes and liquidation proceeds in excess
of the average paid-in capital recognized as capital for Netherlands dividend
withholding tax purposes. ASM Lithography ordinary share stock dividends paid
out of its paid-in-share premium, recognized as capital for Netherlands dividend
withholding tax purposes, will not be subject to this withholding tax.
In general, ASM Lithography is required to remit all amounts withheld as
Dutch dividend withholding tax to the Dutch tax authorities. However, under
certain circumstances ASM Lithography should be allowed to reduce the amount to
be remitted to the Dutch tax authorities by the lesser of (i) 3% of the portion
of the distribution paid by ASM Lithography that is subject to Dutch dividend
withholding tax and (ii) 3% of the dividends and profit distributions, before
deduction of foreign withholding taxes, received by ASM Lithography from
qualifying foreign subsidiaries in the current calendar year (up to the date of
the distribution by ASM Lithography) and the two preceding calendar years, as
far as such dividends and profit distributions have not yet been taken into
account for purposes of establishing the above-mentioned reduction.
A Nonresident Holder of ordinary shares of ASM Lithography can be eligible
for a partial or complete exemption or refund of all or a portion of the above
withholding tax under a tax convention that is in effect between The Netherlands
and the Nonresident Holder's country of residence. The Netherlands has concluded
such conventions with the United States, Canada, Switzerland, Japan, all
European Union member states and other countries.
Under the Convention Between the United States of America and The Kingdom
of the Netherlands for the Avoidance of Double Taxation and the Prevention of
Fiscal Evasion with Respect to Taxes on Income (the "U.S. Tax Treaty"),
dividends paid by ASM Lithography to a Nonresident Holder that is a resident of
the United States as defined in the U.S. Tax Treaty (other than an exempt
organization or exempt pension trust, as discussed below) are generally eligible
for a reduction of the 25% Netherlands withholding tax to 15% or, in the case of
certain United States corporate shareholders owning at least 10% of ASM
Lithography's voting power, to 5%, provided that the shareholder does not have
an enterprise or an interest in an enterprise that is, in whole or in part,
carried on through a permanent establishment or permanent representative in The
Netherlands to which the dividends are attributable. The U.S. Tax Treaty
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provides for a complete exemption from tax on dividends received by exempt
pension trusts and exempt organizations, as defined therein. Except in the case
of exempt organizations, the reduced dividend withholding rate (or exemption
from withholding) can be applied at the source upon payment of the dividends,
provided that the proper forms have been filed in advance of the payment. Exempt
organizations remain subject to the statutory withholding rate of 25% and are
required to file for a refund of such withholding.
A Nonresident Holder may not claim the benefits of the U.S. Tax Treaty
unless:
- it is a resident of the United States as defined therein, and
- its entitlement to those benefits is not limited by the provisions of
Article 26 ("limitation on benefits") of the U.S. Tax Treaty.
WITHHOLDING TAX ON SALE OR OTHER DISPOSITIONS OF ORDINARY SHARES OF ASM
LITHOGRAPHY. Payments on the sale or other dispositions of ordinary shares of
ASM Lithography will not be subject to Netherlands withholding tax, unless the
sale or other disposition is, or is deemed to be, made to ASM Lithography or its
direct or indirect subsidiary. A redemption or sale to a direct or indirect
subsidiary of ASM Lithography will be treated as dividend and will be subject to
the rules discussed in the section entitled "Withholding Tax on Dividends"
above.
TAXES ON INCOME AND CAPITAL GAINS. A Nonresident Holder who receives
dividends distributed by ASM Lithography on its ordinary shares or who realizes
a gain from the sale or disposition of ordinary shares of ASM Lithography, will
not be subject to Netherlands taxation on the income or gain unless:
- the income, dividend or capital gain is attributable to an enterprise or
part thereof that is carried on through a permanent establishment or
permanent representative in The Netherlands
- the Nonresident Holder holds, directly or indirectly, a substantial
interest or a deemed substantial interest in ASM Lithography that does
not form part of the assets of an enterprise
- if a Nonresident Holder is an individual not holding a substantial
interest or a deemed substantial interest in ASM Lithography, certain
persons related to the Nonresident Holder have a substantial interest or
a deemed substantial interest in ASM Lithography that does not form part
of the assets of an enterprise
- in addition, as of January 1, 2001, such income or gain is attributable
to activities performed by the holder in The Netherlands and such
activities exceed normal investment activities
Generally, a holder of ASM Lithography ordinary shares will have a
substantial interest in ASM Lithography's share capital if such holder, by
itself or together with certain connected persons, directly or indirectly, holds
shares or certain rights pertaining to shares representing 5% or more of the
total issued and outstanding capital of ASM Lithography (or the issued and
outstanding capital of any class of its shares) or holds profit sharing
certificates ("Winstbewijzen") giving entitlement to at least 5% of either ASM
Lithography's annual profit or liquidation proceeds. A deemed substantial
interest exists if all or part of a substantial interest has been disposed of,
or is deemed to have been disposed of, with application of a non-recognition
basis. Under the U.S. Tax Treaty, a person who is a resident of the United
States and who has a substantial or deemed substantial interest in ASM
Lithography's share capital will be exempt from income tax imposed by The
Netherlands in respect of capital gains resulting from the sale or other
disposition of their shares in ASM Lithography, unless such person is an
individual who has, at any time during the five-year period preceding the sale
or disposition of ordinary shares of ASM Lithography, been a resident of The
Netherlands, and at the time of the sale or disposition owns, either along or
together with related individuals, at least 25% of any class of ASM Lithography
shares.
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GIFT OR INHERITANCE TAXES. Netherlands gift or inheritance taxes will not
be levied on the transfer of ordinary shares of ASM Lithography by way of gift,
or upon the death of a Nonresident Holder, unless either:
- the transfer is made by or on behalf of a person who, at the time of the
gift, is or is deemed to be resident in The Netherlands or at the time of
death was deemed to be a resident of The Netherlands
- the ordinary shares of ASM Lithography are attributable to an enterprise
or part thereof that is carried on through a permanent establishment or a
permanent representative in The Netherlands
For purposes of Netherlands gift and inheritance tax, an individual of
Netherlands nationality is deemed to be a resident of The Netherlands if the
individual has been a resident of the Netherlands at any time during the ten
years preceding the time of the gift or death. For purposes of Netherlands gift
tax, a person not possessing Netherlands nationality is deemed to be a resident
of The Netherlands if the individual has resided in the Netherlands at any time
in the twelve months preceding the time of the gift.
VALUE ADDED TAX. No Netherlands value added tax is imposed on dividends
under the ordinary shares of ASM Lithography or on the transfer of the ordinary
shares of ASM Lithography.
RESIDENCE. A Nonresident Holder will not become resident, or deemed to be
resident, in The Netherlands solely as a result of holding an ordinary share of
ASM Lithography or of the execution, performance, delivery and/or enforcement of
rights in respect of the ordinary shares of ASM Lithography.
THE FOREGOING DISCUSSION IS INTENDED ONLY AS A SUMMARY AND DOES NOT PURPORT
TO BE A COMPLETE ANALYSIS OR LISTING OF ALL POTENTIAL TAX EFFECTS RELEVANT TO A
DECISION WHETHER TO VOTE IN FAVOR OF APPROVAL OF THE MERGER AND ADOPTION OF THE
MERGER AGREEMENT. SILICON VALLEY GROUP STOCKHOLDERS ARE URGED TO CONSULT THEIR
OWN TAX ADVISORS CONCERNING THE UNITED STATES FEDERAL, STATE, LOCAL AND
NON-UNITED STATES TAX CONSEQUENCES OF THE MERGER TO THEM.
ACCOUNTING TREATMENT OF THE MERGER
We intend to account for the merger as a "pooling of interests" business
combination. It is a condition to the completion of the merger that ASM
Lithography be advised by Deloitte & Touche Accountants, its independent
auditors, and Deloitte & Touche LLP, Silicon Valley Group's independent
auditors, that it is appropriate for the merger to be accounted for as a
"pooling of interests" business combination, although this condition may be
waived by ASM Lithography. Under the "pooling of interests" method of
accounting, each of our historical recorded assets and liabilities will be
carried forward to the combined company at their recorded amounts. In addition,
the operating results of the combined company will include our operating results
for the entire fiscal year in which the merger is completed and our historical
reported operating results for prior periods will be combined and restated as
the operating results of the combined company.
REGULATORY AND GOVERNMENTAL APPROVALS
The merger is subject to the expiration or termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as well as certain foreign antitrust and competition laws. The merger may also
require notification to, and filings with, securities and other authorities in
some states and countries, including jurisdictions where ASM Lithography and
Silicon Valley Group currently operate.
Under the Hart-Scott-Rodino Act, the merger cannot be completed until
notifications have been given and required information has been furnished to the
United States Federal Trade Commission and the Antitrust Division of the United
States Department of Justice and the specified waiting period requirements have
been satisfied. The Department of Justice reviewed the merger under the
Hart-Scott-Rodino Act and granted early termination of the 30-day waiting period
under the Act on November 3, 2000. In addition, all required pre-closing
approvals under foreign competition laws have been obtained.
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However, at any time before or after completion of the merger, the Federal
Trade Commission or the Department of Justice or any state could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the completion of the merger or seeking
divestiture of particular assets of ASM Lithography or Silicon Valley Group.
Private parties also may seek to take legal action under the antitrust laws
under certain circumstances. In addition, foreign governmental and regulatory
authorities may seek to take action under applicable antitrust or competition
laws. A challenge to the merger on antitrust grounds may be made and, if such
challenge is made, the parties may not prevail.
The provisions of the Exon-Florio amendment to the Omnibus Trade and
Competitiveness Act of 1988 empower the President of the United States to
prohibit or suspend an acquisition of, or investment in, a United States company
by a non-United States company if the President finds, after investigation,
credible evidence that the non-United States company might take action that
threatens to impair the national security of the United States and that
provisions of existing law do not provide adequate and appropriate authority to
protect the national security. Any determination that an investigation is called
for must be made within 30 days of notice of the proposed transaction. If a
determination is made, any investigation must be completed within 45 days of the
determination and any decision to take action must be announced within 15 days
of completion of the investigation. The Committee for Foreign Investment in the
United States (CFIUS) is charged with reviewing certain investments by a
non-United States company in a United States company, and to determine whether
an investigation under the provisions of Exon-Florio should be conducted. The
parties submitted a voluntary notice under the Exon-Florio amendment on December
13, 2000 requesting confirmation that the merger and the other transactions
contemplated by the merger agreement do not raise concerns under the Exon-Florio
amendment. Any determination that an investigation is called for under the
Exon-Florio amendment must be made within 30 days of the voluntary notice.
RESTRICTIONS ON SALES OF SHARES BY AFFILIATES OF SILICON VALLEY GROUP AND ASM
LITHOGRAPHY
The ASM Lithography ordinary shares to be issued in connection with the
merger will be registered under the Securities Act of 1933, as amended, and will
be freely transferable under the Securities Act, except for ASM Lithography
ordinary shares issued to any person who is deemed to be an "affiliate" of
either of us at the time of the special meeting. Persons who may be deemed to be
affiliates include individuals or entities that control, are controlled by, or
are under common control of either of us and may include some of our officers
and directors, as well as our principal stockholders. Affiliates may not sell
their ASM Lithography ordinary shares acquired in connection with the merger
except pursuant to:
- an effective registration statement under the Securities Act covering the
resale of those shares
- an exemption under paragraph (d) of Rule 145 under the Securities Act
- any other applicable exemption under the Securities Act
- a transaction not subject to the registration requirements of the
Securities Act pursuant to Regulation S thereunder
ASM Lithography's registration statement on Form F-4, of which this proxy
statement-prospectus forms a part, does not cover the resale of ASM Lithography
ordinary shares to be received by Silicon Valley Group's affiliates in the
merger and ASM Lithography has not granted any registration rights relating to
these shares.
The merger agreement requires each of us to use our reasonable best efforts
to have our affiliates agree in writing to certain restrictions on their
disposition of our shares. The restrictions contained in the affiliate
agreements relate to compliance with the securities laws and pooling of
interests business combination rules.
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LISTING ON THE NASDAQ NATIONAL MARKET AND ON THE OFFICIAL SEGMENT OF THE STOCK
MARKET OF EURONEXT AMSTERDAM N.V. OF ASM LITHOGRAPHY ORDINARY SHARES TO BE
ISSUED IN THE MERGER
ASM Lithography will use its reasonable best efforts to cause the ordinary
shares of ASM Lithography to be issued in the merger to be approved for listing
on the Nasdaq National Market and on the Official Segment of the stock market of
Euronext Amsterdam N.V., subject to official notice of issuance.
DISSENTERS' AND APPRAISAL RIGHTS
Holders of shares of Silicon Valley Group common stock are not entitled to
exercise dissenters' or appraisal rights as a result of the merger or to demand
payment for your shares under Delaware law.
Holders of shares of Silicon Valley Group series 1 preferred stock (which
is not publicly traded) who comply with the provisions of Section 262 of the
Delaware General Corporation Law are entitled to appraisal rights in the merger.
If the merger is completed, holders of record of Silicon Valley Group
series 1 preferred stock who object to the terms of the merger may seek an
appraisal under Section 262 of the Delaware General Corporation Law for the
judicially determined fair value of their shares. As this is not a complete
description, a copy of Section 262 is attached to this document as Annex C.
Holders of Silicon Valley Group series 1 preferred stock should review Section
262 carefully. If you fail to take any action required by Section 262, you will
terminate or waive your rights to appraisal under Section 262.
Holders of Silicon Valley Group series 1 preferred stock will receive a
notice relating to their appraisal rights as follows:
- before the effective time, Silicon Valley Group will notify each holder
of Silicon Valley Group series 1 preferred stock that the merger has been
approved and that appraisal rights are available for any or all shares of
Silicon Valley Group series 1 preferred stock held by that holders; or
- within ten days after the effective time, ASM Lithography, will notify
each holder of Silicon Valley Group series 1 preferred stock that
appraisal rights are available for any or all shares of Silicon Valley
Group series 1 preferred stock held by that holder as of the effective
time of the merger.
This proxy statement-prospectus may be deemed to be the notice referred to
above.
Holders of Silicon Valley Group series 1 preferred stock who elect to
exercise appraisal rights must:
- deliver a written demand for appraisal to Silicon Valley Group within 20
days after the date of mailing of the notice; and
- not vote for or consent in writing to the approval of the merger
agreement and the merger.
Holders of Silicon Valley Group series 1 preferred stock must deliver their
demand to Silicon Valley Group, Inc. at 101 Metro Drive, Suite 400, San Jose,
California 95110. The demand will be sufficient if it reasonably informs Silicon
Valley Group or ASM Lithography, as the case may be, of the identity of the
stockholder and that the stockholder intends to demand the appraisal of such
stockholder's Silicon Valley Group series 1 preferred stock.
Only holders of record of Silicon Valley Group series 1 preferred stock
will be entitled to demand appraisal rights for Silicon Valley Group series 1
preferred stock registered in their name. The demand must be executed by or for
the holder of record, fully and correctly, as such person's name appears on his
or her Silicon Valley Group series 1 preferred stock certificates. An authorized
agent, including one of two or more joint owners, may execute the demand for
appraisal for a holder of record; however, the agent must identify the holder of
record and expressly disclose the fact that, in executing the demand, the agent
is acting as agent for such person.
If a holder of record, such as a broker, holds Silicon Valley Group series
1 preferred stock as nominee for beneficial owners, the holder may exercise his
or her right of appraisal with respect to Silicon Valley Group series 1
preferred stock held for all or less than all of such beneficial owners. In this
case, the written demand should state the number of shares of Silicon Valley
Group series 1 preferred stock covered by the demand. If no number of shares of
Silicon Valley Group series 1 preferred stock is expressly
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mentioned, we will presume it covers all shares of Silicon Valley Group series 1
preferred stock outstanding in the name of the holder of record.
Within 10 days after the effective time, we will send notice of the
effectiveness of the merger to each person who satisfied the above conditions
prior to the effective time.
Within 120 days after the effective time, Silicon Valley Group or any
Silicon Valley Group series 1 preferred stockholder who has satisfied the above
conditions may file a petition in the Delaware Court of Chancery demanding a
determination of the fair value of the Silicon Valley Group series 1 preferred
stock. If you are seeking to exercise your appraisal rights, you should not
assume that we will file a petition to appraise the value of your Silicon Valley
Group series 1 preferred stock or that we will initiate any negotiations with
respect to the fair value of your Silicon Valley Group series 1 preferred stock.
Accordingly, you should initiate all necessary action if you wish to perfect
your appraisal rights within the time periods specified in Section 262.
If you demand an appraisal in compliance with Section 262, you will not,
after the effective time, be entitled to vote the shares subject to this demand
for any purpose. You will also not have the right to dividends or other
distributions on that Silicon Valley Group series 1 preferred stock, other than
those payable or deemed to be payable to stockholders of record as of a date
prior to the effective time.
You will lose your right to appraisal if you do not file a petition within
120 days after the effective time, or if you deliver a withdrawal of your demand
for an appraisal and an acceptance of the merger to Silicon Valley Group. Any
attempt to withdraw made more than 60 days after the effective time will require
our written approval.
You will be entitled to receive the consideration you would have been paid
under the merger agreement if:
- you do not perfect your appraisal rights; or
- you withdraw your demand for appraisal rights.
If you correctly follow the procedures described above and perfect your
right of appraisal after instituting a timely appraisal, your appraisal
proceeding cannot be dismissed without the approval of the Delaware court.
DELISTING AND DEREGISTRATION OF SILICON VALLEY GROUP COMMON STOCK AFTER THE
MERGER
If the merger is completed, Silicon Valley Group common stock will be
delisted from the Nasdaq National Market and will be deregistered under the
United States Securities Exchange Act of 1934.
SILICON VALLEY GROUP'S EMPLOYEE BENEFIT PLANS
Individuals who will be employed by Silicon Valley Group when the merger is
completed will be expected to remain employed by Silicon Valley Group. These
employees will receive full credit for their service with Silicon Valley Group
and its subsidiaries for purposes of eligibility and vesting under employee
benefit plans. In addition, for a period of at least one year after completion
of the merger, the coverage and benefits provided to Silicon Valley Group
employees pursuant to employee benefit plans will, in the aggregate, be no less
favorable than those provided to employees immediately prior to completion of
the merger.
TREATMENT OF SILICON VALLEY GROUP STOCK OPTIONS AND OTHER EQUITY BASED AWARDS
Upon completion of the merger, each outstanding option to purchase Silicon
Valley Group common stock will be converted, in accordance with its terms, into
an option to purchase the number of ordinary shares of ASM Lithography that is
equal to the product of 1.286 multiplied by the number of shares of Silicon
Valley Group common stock that could have been acquired before the merger upon
the exercise of that option, rounded down to the nearest whole share. The
exercise price will be equal to the exercise price
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per share of Silicon Valley Group common stock subject to the option before
conversion divided by 1.286, rounded up to the nearest whole cent. The other
terms of each option and the Silicon Valley Group option plans referred to above
under which the options were issued will continue to apply in accordance with
their terms, including any provisions providing for vesting. In the event that
an option holder has an agreement with Silicon Valley Group that provides for a
different treatment of the options than as described above, the terms of that
agreement will control.
ASM Lithography will file a registration statement covering the issuance of
the ordinary shares of ASM Lithography subject to each option under the Silicon
Valley Group stock option plans and will use its best efforts to maintain the
effectiveness of that registration statement for as long as any of the Silicon
Valley Group stock options remain outstanding.
Silicon Valley Group will cause its Employee Stock Purchase Plan to
terminate at or prior to the completion of the merger. The rights of
participants in the Employee Stock Purchase Plan with respect to any offering
period under way as of the completion of the merger will be determined by
treating the last business day prior to the completion of the merger as the last
day of that offering period.
EFFECT OF THE MERGER ON OUTSTANDING SERIES 1 PREFERRED STOCK OF SILICON VALLEY
GROUP
There are currently 15,000 shares of series 1 preferred stock of Silicon
Valley Group outstanding, all of which are held by Intel Corporation. Those
shares are convertible into a total of 1,111,111 shares of common stock of
Silicon Valley Group. Simultaneously with the completion of the merger, the
outstanding shares of series 1 preferred stock of Silicon Valley Group will be
canceled in exchange for the right to receive 1.286 ASM Lithography ordinary
shares for each share of Silicon Valley Group common stock that the holder of
the series 1 preferred stock would have been entitled to receive if the holder
had converted the series 1 preferred stock into Silicon Valley Group common
stock before the merger.
CERTAIN PROVISIONS OF THE MERGER AGREEMENT
OUR REPRESENTATIONS AND WARRANTIES. We each made a number of customary
representations and warranties in the merger agreement regarding aspects of our
respective businesses, financial conditions, structures and other facts
pertinent to the merger.
The representations and warranties given by Silicon Valley Group cover the
following topics, among others, as they relate to Silicon Valley Group and its
subsidiaries:
- corporate organization, qualification to do business, existence and good
standing
- capitalization
- authorization of the merger agreement by Silicon Valley Group's board of
directors
- approvals required to complete the merger
- filings and reports with the Securities and Exchange Commission
- financial statements
- undisclosed liabilities
- the absence of certain changes since June 30, 2000
- title to properties and leases
- material contracts
- possession of and compliance with required permits
- litigation
- compliance with applicable laws
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- information supplied for this proxy statement-prospectus and the related
registration statement filed by ASM Lithography
- employee benefit plans and employment practices
- taxes
- environmental matters
- intellectual property
- qualification of the merger for pooling of interests business combination
accounting treatment and as a tax-free reorganization
- opinion of financial advisor
- brokers' and finder's fees
- inapplicability of anti-takeover statutes and rights plan
The representations given by ASM Lithography cover the following topics,
among others, as they relate to ASM Lithography and its subsidiaries:
- corporate organization, qualification to do business, existence and good
standing
- capitalization
- authorization of the merger agreement by ASM Lithography's and certain of
its subsidiaries' respective governing boards
- approvals required to complete the merger
- filings and reports with the Securities and Exchange Commission
- financial statements
- the absence of certain changes since June 30, 2000
- compliance with applicable laws
- litigation
- information supplied for this proxy statement-prospectus and the related
registration statement filed by ASM Lithography
- intellectual property
- qualification of the merger for pooling of interests business combination
accounting treatment and as a tax-free reorganization
- brokers' and finder's fees
The representations and warranties in the merger agreement are complicated
and not easily summarized. You are urged to read carefully the articles of the
merger agreement entitled "Representations and Warranties of the Company" and
"Representations and Warranties of the Parent Companies."
CONDITIONS TO COMPLETION OF THE MERGER. Our respective obligations to
complete the merger are subject to the satisfaction or waiver of each of the
following conditions before completion of the merger:
- the merger agreement must be adopted by the holders of a majority of the
outstanding shares of Silicon Valley Group common stock
- no law, regulation or order shall be enacted or issued which has the
effect of making the merger illegal and no proceeding by any governmental
authority which challenges or seeks to enjoin the merger shall be pending
59
<PAGE> 66
- all applicable waiting periods under the Hart-Scott-Rodino Act and any
other applicable antitrust laws must have expired or been terminated and
all approvals under those laws must have been obtained
- the registration statement relating to the merger shall have been
declared effective by the Securities and Exchange Commission and not be
the subject of any stop order or proceedings seeking a stop order
- the ASM Lithography ordinary shares to be issued in the merger shall have
been authorized for listing on the Nasdaq National Market, subject to
official notice of issuance
ASM Lithography's obligations to complete the merger and the other
transactions contemplated by the merger agreement are subject to the
satisfaction or waiver of each of the following additional conditions before
completion of the merger:
- Silicon Valley Group's representations and warranties must be true and
correct as of the day the merger becomes effective, as if made at and as
of such time, except for changes permitted by the merger agreement and
unless another time is specifically contemplated. If any of Silicon
Valley Group's representations and warranties are not true and correct
but the cumulative effect of all inaccuracies of Silicon Valley Group's
representations and breaches of such warranties does not have a material
adverse effect on Silicon Valley Group, then this condition will be
deemed satisfied
- Silicon Valley Group must perform or comply in all material respects with
all of its covenants required by the merger agreement to be performed and
complied with prior to the effective time
- ASM Lithography must receive the opinion of its tax counsel, Skadden,
Arps, Slate, Meagher & Flom LLP, to the effect that the merger will be
treated as a tax-free reorganization under the Internal Revenue Code
- ASM Lithography must have received a letter from Deloitte & Touche
Accountants, its independent auditors, and Deloitte & Touche LLP, Silicon
Valley Group's independent auditors, to the effect that it is appropriate
for ASM Lithography to apply pooling-of-interests business combination
accounting to the merger
- Silicon Valley Group's affiliates must have delivered the executed
affiliate agreements referred to on page 55 of this proxy
statement-prospectus
Silicon Valley Group's obligations to complete the merger and the other
transactions contemplated by the merger agreement are subject to the
satisfaction or waiver of each of the following additional conditions before
completion of the merger:
- ASM Lithography's representations and warranties must be true and correct
as of the day the merger becomes effective, as if made at and as of such
time, except for changes permitted by the merger agreement and unless
another time is specifically contemplated. If any of ASM Lithography's
representations and warranties are not true and correct but the
cumulative effect of all inaccuracies of ASM Lithography's
representations and breaches of such warranties does not have a material
adverse effect on ASM Lithography, then this condition will be deemed
satisfied
- ASM Lithography must perform or comply in all material respects with all
of its covenants required by the merger agreement
- Silicon Valley Group must receive the opinion of its tax counsel, Wilson
Sonsini Goodrich & Rosati, Professional Corporation, to the effect that
the merger will be treated as a tax-free reorganization under the
Internal Revenue Code
Although certain of these conditions may be waived, neither ASM Lithography
or Silicon Valley Group has a present intention on waiving any of the
conditions. Prior to waiving the condition relating to the merger qualifying as
a tax free reorganization, Silicon Valley Group will resolicit proxies from its
stockholders. Prior to waiving any other condition to its obligation to complete
the merger, Silicon Valley
60
<PAGE> 67
Group will consider the facts and circumstances at that time and make a
determination as to whether a resolicitation of proxies from Silicon Valley
Group stockholders is appropriate.
SILICON VALLEY GROUP'S CONDUCT OF BUSINESS BEFORE COMPLETION OF THE
MERGER. Silicon Valley Group has agreed that, until the completion of the
merger, except as agreed to by ASM Lithography or as permitted by the merger
agreement, Silicon Valley Group and its subsidiaries will each operate its
business in the ordinary course, and will use its reasonable best efforts to
preserve intact their business organization and goodwill and their relationships
with Silicon Valley Group's current officers, key employees and business
partners. In addition to these agreements regarding the conduct of business
generally, Silicon Valley Group has agreed to some specific restrictions on
Silicon Valley Group and its subsidiaries relating to the following:
- declarations of or payments of dividends
- alteration of its capital, including stock and other equity interests
- issuance or sale of capital stock, any voting debt or other equity
interests
- entering into or modifying employee benefits plans and employment
agreements
- repurchase or redemption of capital stock
- entering into agreements with respect to any merger, consolidation or
business combination
- amendments to organizational documents
- extension of loans, advances, capital contributions or investments
- incurrence of debt
- encumbrances or dispositions of assets
- changes to any material tax election and settlements or compromise of any
material tax liability
- changes to its fiscal year
- changes to accounting policies or procedures
- amendments or modifications to its rights agreement
- entering into or amending certain contracts requiring payments in excess
of $10,000,000
- amendments to contracts with Intel Corporation
- actions that would prevent or impede the merger from qualifying as a
pooling-of-interests business combination for accounting purposes and a
tax-free reorganization under section 368 of the Internal Revenue Code
- actions that would cause the representations and warranties in the merger
agreement to no longer be true
- actions that would result, or would reasonably be expected to result, in
any of the conditions to the merger not being satisfied, or a material
delay in the satisfaction of any of the conditions to the merger
ASM LITHOGRAPHY'S CONDUCT OF BUSINESS BEFORE COMPLETION OF THE MERGER. ASM
Lithography has agreed that, until the completion of the merger, except as
agreed to by Silicon Valley Group or permitted by the merger agreement, ASM
Lithography will not:
- declare or pay any dividends
- take any action that would result in any of the conditions to the merger
not being satisfied
61
<PAGE> 68
The agreements related to the conduct of ASM Lithography's and Silicon
Valley Group's business in the merger agreement are complicated and not easily
summarized. You are urged to read carefully the article of the merger agreement
entitled "Covenants."
NO OTHER NEGOTIATIONS INVOLVING SILICON VALLEY GROUP. The merger agreement
contains detailed provisions prohibiting Silicon Valley Group from seeking an
alternative transaction. Under these "no solicitation" provisions, Silicon
Valley Group has agreed to terminate any solicitation or discussions with third
parties with respect to any Takeover Proposal, as described below. Silicon
Valley Group has also agreed not to:
- solicit or encourage the making or submission of a Takeover Proposal
- provide any information to any person relating to a Takeover Proposal
- initiate or participate in any way in any negotiations concerning a
Takeover Proposal
- enter into any agreement with respect to any Takeover Proposal or enter
into any agreement requiring Silicon Valley Group to fail to consummate
the merger
- grant any waiver or release under any standstill or similar agreement
with respect to any class of Silicon Valley Group's common stock or other
equity interests
However, Silicon Valley Group may participate in discussions or
negotiations with or furnish information to any third party that makes a bona
fide written unsolicited Takeover Proposal for all or substantially all of the
equity securities of Silicon Valley Group that is reasonably capable of being
completed if both of the following occur:
- Silicon Valley Group's board of directors determines in good faith, after
consulting with its financial advisors, that the Takeover Proposal is
superior to the merger and that the Takeover Proposal is reasonably
capable of being completed
- Silicon Valley Group's board of directors determines in good faith, after
consulting with its legal advisors, that the failure to engage in the
negotiations or discussions or provide the non-public information would
be inconsistent with its fiduciary duties under applicable law
Prior to the adoption of the merger agreement by the stockholders of
Silicon Valley Group, the board of directors of Silicon Valley Group may
withdraw or modify its recommendation of the merger if it determines that a
Takeover Proposal is superior to the merger and the failure to do so would be
inconsistent with its fiduciary duties. The board of directors of Silicon Valley
Group, however, will still be required to submit the merger to the stockholders
of Silicon Valley Group for their adoption or rejection.
A Takeover Proposal is any inquiry, offer or proposal relating to:
- any acquisition of 15% or more of the assets or class of equity interests
of Silicon Valley Group or any of its subsidiaries
- any tender offer or exchange offer for the equity securities of Silicon
Valley Group or its subsidiaries that, if completed, would result in any
person beneficially owning 15% or more of any class of equity securities
of Silicon Valley Group or any of its subsidiaries
- a merger, business combination, sale of assets or similar transaction of
Silicon Valley Group or any of its subsidiaries
- any sale, lease, exchange, transfer or other disposition of 15% or more
of the assets of Silicon Valley Group and its subsidiaries, taken as a
whole
TERMINATION OF THE MERGER AGREEMENT. The merger agreement may be
terminated at any time before the completion of the merger, even if the Silicon
Valley Group stockholders have adopted it:
- by mutual written consent of ASM Lithography and Silicon Valley Group
- by ASM Lithography or Silicon Valley Group:
62
<PAGE> 69
- if the merger is not completed before June 30, 2001, except that the
right to terminate the merger agreement is not available to any
party whose failure to fulfill any obligation under the merger
agreement has been a cause of the failure to complete the merger on
or before June 30, 2001
- if there is any law, regulation or order enacted or entered which
prohibits the completion of the merger or there is a final order
from a governmental authority permanently prohibiting the completion
of the merger, unless the party relying on the order has not used
its reasonable best efforts to remove the order
- if the merger agreement fails to receive the required vote for
adoption by the stockholders of Silicon Valley Group
- if the other party materially breaches the merger agreement in a
manner that would cause that party's representations and warranties
to become untrue or inaccurate so that the corresponding condition
to completion of the merger would not be met, unless that party
corrects the breach within 30 days of being notified of it
- by ASM Lithography:
- if Silicon Valley Group's board of directors recommends to Silicon
Valley Group's stockholders any Takeover Proposal other than the
transaction with ASM Lithography contemplated by the merger
agreement
- if Silicon Valley Group's board of directors withdraws or modifies
its approval or recommendation of the merger in a manner adverse to
ASM Lithography
- if a tender or exchange offer relating to 15% or more of the
outstanding common stock of Silicon Valley Group is made by anyone
other than ASM Lithography, and, within 10 business days after the
offer is first made, Silicon Valley Group fails to send to its
security holders a statement recommending rejection of the offer
PAYMENT OF TERMINATION FEE. Silicon Valley Group will pay to ASM
Lithography a termination fee of $47,000,000 if the merger agreement is
terminated by ASM Lithography because:
- Silicon Valley Group's board of directors recommends to Silicon Valley
Group's stockholders any Takeover Proposal other than the transaction
with ASM Lithography contemplated by the merger agreement
- Silicon Valley Group's board of directors withdraws or modifies its
approval or recommendation of the merger in a manner adverse to ASM
Lithography
- a tender or exchange offer relating to 15% or more of the outstanding
common stock of Silicon Valley Group is made by anyone other than ASM
Lithography, and within 10 business days after the offer is first
published, Silicon Valley Group fails to send to its security holders a
statement recommending rejection of the offer
In addition, Silicon Valley Group will pay to ASM Lithography a termination
fee of $47,000,000 in the event that
- the merger agreement is terminated by either ASM Lithography or Silicon
Valley Group because the merger has not become effective by June 30, 2001
or the stockholders of Silicon Valley Group have failed to approve the
merger agreement and
- within 12 months of the date the agreement is terminated, Silicon Valley
Group or any of its subsidiaries completes or enters into a definitive
agreement with respect to a Takeover Proposal with any company other than
ASM Lithography involving the acquisition of 40% or more of the stock
(after giving effect to all outstanding securities convertible into
shares of Silicon Valley Group) or assets of Silicon Valley Group or its
subsidiaries that was announced prior to the termination of the merger
agreement
63
<PAGE> 70
EXTENSION, WAIVER AND AMENDMENT OF THE MERGER AGREEMENT. ASM Lithography
and Silicon Valley Group may amend the merger agreement before completion of the
merger. However, after the Silicon Valley Group stockholders adopt the merger
agreement, no change will be made to the number of ordinary shares of ASM
Lithography for which shares of common stock of Silicon Valley Group will be
converted.
Either of us may extend the other's time for the performance of any of the
obligations or other acts under the merger agreement, waive any inaccuracies in
the other's representations and warranties and waive compliance by the other
with any of the agreements or conditions contained in the merger agreement.
64
<PAGE> 71
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
The following information has been provided to aid you in your analysis of
the financial aspects of the merger. This information was derived from the
audited consolidated financial statements of ASM Lithography for the years ended
December 31, 1999, 1998 and 1997, and the audited consolidated financial
statements of Silicon Valley Group for the years ended September 30, 1999, 1998
and 1997, each of which has been prepared in accordance with United States
generally accepted accounting principles. The information for the unaudited pro
forma condensed combined statements of operations for the six months ended June
30, 2000 and 1999 was derived from the unaudited condensed consolidated
statements of operations of ASM Lithography for the six months ended June 30,
2000 and 1999, and the unaudited condensed consolidated statements of operations
of Silicon Valley Group for the six months ended March 31, 2000 and 1999. In
addition, the pro forma condensed statements of operations for the year ended
December 31, 1999 and the six months ended June 30, 1999 include the unaudited
statements of operations of the Semiconductor Equipment Group of Watkins-Johnson
Company (WJ-Semiconductor Equipment Group) prior to its acquisition on July 6,
1999 by Silicon Valley Group in a transaction accounted for using the purchase
method of accounting. The unaudited pro forma condensed combined balance sheet
as of June 30, 2000 combines the unaudited condensed consolidated balance sheets
as of June 30, 2000 of ASM Lithography and Silicon Valley Group.
The information is only a summary and should be read together with the
historical financial statements and related notes contained in the annual
reports and other information that ASM Lithography and Silicon Valley Group have
filed with the Securities and Exchange Commission and incorporated by reference
in this proxy statement-prospectus.
The merger is expected to be accounted for as a "pooling of interests."
This means that, for accounting and financial reporting purposes, the companies
will be treated as if they had always been combined. We have presented unaudited
pro forma condensed combined financial information that reflects the pooling of
interests method of accounting to provide a picture of what the businesses might
have looked like had they always been combined. The unaudited pro forma
condensed combined statements of operations and pro forma condensed combined
balance sheets were prepared by combining the historical amounts of each
company. The companies may have performed differently had they always been
combined. You should not rely on the unaudited pro forma condensed combined
financial information as being indicative of the historical results that would
have occurred or the future results that will occur after the merger.
The unaudited pro forma condensed combined balance sheet as of June 30,
2000 is presented as if the merger had occurred on June 30, 2000. The unaudited
pro forma condensed combined statements of operations for the six months ended
June 30, 2000 and 1999 and for the years ended December 31, 1999, 1998 and 1997,
are presented as if the companies had always been merged.
65
<PAGE> 72
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
HISTORICAL
----------------------------- SILICON ASM PRO
SILICON ASM VALLEY GROUP LITHOGRAPHY FORMA PRO FORMA
VALLEY GROUP(1) LITHOGRAPHY ADJUSTMENTS ADJUSTMENTS COMBINED COMBINED(2)
--------------- ----------- ------------ ----------- --------- -----------
IN EUROS '000 IN DOLLARS
---------------------------------------------------------------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and equivalents......... 135,283 866,357 1,001,640 869,630
Short-term investments....... 28,194 -- 28,194 24,478
Accounts receivable.......... 196,472 499,203 695,675 603,989
Inventories, net............. 260,899 456,651 717,550 622,981
Prepaid expenses and other
assets..................... 10,484 53,672 64,156 55,701
Deferred income taxes........ 30,700 -- 30,700 26,654
------- --------- --------- ---------
Total current
assets.............. 662,032 1,875,883 2,537,915 2,203,433
Property and equipment, net.... 202,983 209,095 412,078 357,769
Other assets................... 10,003 16,588 26,591 23,087
Intangible assets, net......... 2,181 18,918 21,099 18,318
------- --------- --------- ---------
Total assets.......... 877,199 2,120,484 2,997,683 2,602,607
----------- ---------- --------- ----------
----------- ---------- --------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable............. 58,729 181,463 240,192 208,536
Accrued liabilities.......... 147,341 161,432 308,773 268,079
Current portion of long-term
debt....................... 1,621 -- 1,621 1,407
Current tax liability........ 3,811 65,949 69,760 60,566
Deferred tax liability....... -- 12,394 12,394 10,761
------- --------- --------- ---------
Total current
liabilities......... 211,502 421,238 632,740 549,349
Convertible subordinated
bonds........................ -- 814,405 814,405 707,072
Long-term debt................. 26,983 -- 26,983 23,427
Deferred and other
liabilities.................. 10,819 -- 10,819 9,393
Minority interest.............. -- 113,545 113,545 98,580
Stockholders' equity:
Convertible preferred stock-
shares outstanding......... 15,672 (15,672)
Priority shares.............. 1 1 1
Common stock-shares
outstanding................ 440,446 8,258 (440,446) 859 9,117 7,916
Share premium................ 165,349 455,259 620,608 538,816
Retained earnings............ 159,885 453,521 613,406 532,563
Earnings current year........ 13,716 144,441 158,157 137,313
Accumulated other
comprehensive loss......... (1,824) (274) (2,098) (1,822)
------- --------- --------- ------- --------- ---------
Total stockholders'
equity.............. 627,896 771,296 (456,118)(3) 456,118(3) 1,399,192 1,214,787
------- --------- --------- ------- --------- ---------
Total liabilities and
stockholders'
equity.............. 877,199 2,120,484 2,997,683 2,602,607
----------- ---------- --------- ----------
----------- ---------- --------- ----------
</TABLE>
---------------
(1) Original United States dollar amounts presented in Silicon Valley Group's
financial statements have been converted into euros using the historical
exchange rate as of June 30, 2000 of $1.00 = Euro 1.0465.
(2) Solely for the convenience of the reader, certain euro amounts presented as
of June 30, 2000 have been translated into United States dollars using the
exchange rate in effect on October 10, 2000 of
$1.00 = Euro 1.1518.
(3) See note (f) to the Notes to Unaudited Pro Forma Condensed Combined
Financial Information on page 76.
66
<PAGE> 73
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000
<TABLE>
<CAPTION>
HISTORICAL
--------------------------
SILICON PRO
VALLEY GROUP ASM PRO FORMA FORMA
(1)(2) LITHOGRAPHY ADJUSTMENTS COMBINED PRO FORMA(3)
------------ ----------- ----------- --------- ------------
IN U.S.
IN EUROS '000 (EXCEPT PER SHARE DATA) DOLLARS
------------------------------------------------------ ------------
<S> <C> <C> <C> <C> <C>
Net sales............................. 392,162 971,701 -- 1,363,863 1,184,114
Cost of sales......................... 224,835 582,118 33,594(4) 840,547 739,768
------- -------- ------- --------- ---------
Gross profit.......................... 167,327 389,583 (33,594) 523,316 454,346
Operating expenses:
Research and development costs...... 68,319 111,112 -- 179,431 155,783
Research and development credits.... (3,639) (7,906) -- (11,545) (10,023)
Selling, general and administrative
expenses.......................... 78,044 79,705 (33,594)(4) 124,155 107,792
------- -------- ------- --------- ---------
Total expenses...................... 142,724 182,911 (33,594) 292,041 253,552
Operating income...................... 24,603 206,672 -- 231,275 200,795
Interest (income) expense, net and
other income........................ (3,856) 477 -- (3,379) (2,934)
------- -------- --------- ---------
Income before income taxes............ 28,459 206,195 -- 234,654 203,729
Provision for income taxes............ 10,246 61,754 -- 72,000 62,511
------- -------- --------- ---------
------- -------- --------- ---------
Net income............................ 18,213 144,441 -- 162,654 141,218
---------- ---------- --------- -----------
---------- ---------- --------- -----------
Net income per share -- basic......... 0.35 0.31
Shares used in per share
computations --
basic............................... 461,398 461,398
Net income per share -- diluted....... 0.34 0.29
Shares used in per share
computations -- diluted............. 482,242 482,402
</TABLE>
---------------
(1) Original United States dollar amounts presented in Silicon Valley Group's
financial statements have been converted into euros using the average
historical exchange rate for the six months ended June 30, 2000 of
$1.00 = Euro 1.0202.
(2) For Silicon Valley Group, results for the six months ended March 31, 2000
are included. As a consequence, the results for the three months ended June
30, 2000 have been excluded from the Pro Forma Condensed Financial Data.
Silicon Valley Group's net sales and net income for the three months ended
June 30, 2000 are Euro 222.4 million and Euro 13.4 million, respectively.
(3) Solely for the convenience of the reader, certain euro amounts presented as
of and for the six months ended June 30, 2000 have been translated into
United States dollars using the exchange rate in effect on October 10, 2000
of $1.00 = Euro 1.1518.
(4) Adjustment relates to the reclassification of installation and warranty
costs of Silicon Valley Group.
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<PAGE> 74
UNAUDITED PRO FORMA CONDENSED COMBINED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED JUNE 30, 2000
The following Unaudited Pro Forma Condensed Combined Cash Flow Statement is
presented solely for the purpose of complying with the requirements of the
Official Segment of the stock market of Euronext Amsterdam N.V. It does not
reflect the inclusion of the historical cash flow statements of the acquired
business of the Semiconductor Equipment Group of Watkins-Johnson Company. The
Regulations of the United States Securities and Exchange Commission do not
require the inclusion of pro forma statements of cash flows, and therefore this
information does not purport to comply with the requirements of the Securities
and Exchange Commission.
<TABLE>
<CAPTION>
HISTORICAL
--------------------------
SILICON PRO FORMA
VALLEY GROUP ASM PRO FORMA PRO UNITED STATES
(1)(2) LITHOGRAPHY ADJUSTMENTS FORMA DOLLARS(3)
------------ ----------- ----------- --------- -------------
IN EUROS '000
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATIONS:
Net income (loss)...................... 18,214 144,441 162,655 141,218
Depreciation and amortization.......... 24,876 32,166 57,042 49,524
Change in assets and liabilities....... 7,853 (31,084) (23,231) (20,169)
------- ------- ------- -------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES................. 50,943 145,523 196,466 170,573
CASH FLOWS FROM INVESTING ACTIVITIES:
Net capital expenditures............... (22,713) (36,750) (59,463) (51,626)
Purchases of short-term investments,
available for sales.................. (17,367) -- (17,367) (15,078)
Maturities of short-term investments,
available for sales.................. 17,178 -- 17,178 14,914
------- ------- ------- -------
NET CASH USED IN INVESTING
ACTIVITIES........................... (22,902) (36,750) (59,652) (51,790)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of shares and
stock options........................ 6,067 15,413 21,480 18,650
Other financing activities............. (737) -- (737) (640)
------- ------- ------- -------
NET CASH PROVIDED BY FINANCING
ACTIVITIES........................... 5,330 15,413 20,744 18,010
Effect of changes in exchange rates
on cash.............................. 300 25,562 25,862 22,454
Cash related to minority interest
(4).................................. -- 113,545 113,545 98,580
------- ------- ------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS..................... 33,671 263,293 296,964 257,827
---------- --------- -------- ----------
---------- --------- -------- ----------
</TABLE>
---------------
(1) Original United States dollar amounts presented in Silicon Valley Group's
financial statements have been converted into euros using the average
historical exchange rate for the six months ended June 30, 2000 of $1.00 =
Euro 1.0202.
(2) For Silicon Valley Group, figures for the six months ended March 31, 2000
are included. As a consequence, the decrease in cash and cash equivalents
for the three months ended June 30, 2000 has been excluded from the Pro
Forma Condensed Combined Financial Data. Silicon Valley Group's decrease in
cash and cash equivalents for the three months ended June 30, 2000 is Euro
1.2 million.
(3) Solely for the convenience of the reader, certain amounts presented as of
and for the six months ended June 30, 2000 have been translated into United
States dollars using the exchange rate in effect on October 10, 2000 of
$1.00 = Euro 1.1518.
(4) Cash and cash equivalents contains an amount of Euro 113,545 of restricted
cash related to a structured financing subsidiary. This amount is not
available for operating and/or investing activities of the company.
68
<PAGE> 75
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999
<TABLE>
<CAPTION>
HISTORICAL
---------------------------------------------
WJ-SEMICONDUCTOR SILICON PRO
EQUIPMENT GROUP VALLEY GROUP ASM PRO FORMA FORMA
(1)(2) (1)(2) LITHOGRAPHY ADJUSTMENTS COMBINED
---------------- ------------ ----------- ----------- --------
IN EUROS '000 (EXCEPT PER SHARE DATA)
------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales.......................... 51,743 139,061 407,883 598,687
Cost of sales...................... 31,010 102,920 293,777 16,130(3)
(79)(4) 443,758
------ ------- ------- ------- -------
Gross profit....................... 20,733 36,141 114,106 (16,051) 154,929
Operating expenses:
Research and development costs... 9,637 38,344 75,907 (166)(4) 123,722
Research and development
credits........................ (2,722) (23,087) (25,809)
Selling, general and
administrative expenses........ 11,068 37,435 57,743 (16,130)(3)
(116)(4) 90,000
------ ------- ------- ------- -------
Total expenses..................... 20,705 73,057 110,563 (16,412) 187,913
Operating income (loss)............ 28 (36,916) 3,543 361 (32,984)
Interest (income) expense, net and
other income..................... (283) (2,097) 674 (1,706)
------ ------- ------- ------- -------
Income (loss) before income
taxes............................ 311 (34,819) 2,869 361 (31,278)
Provision (benefit) for income
taxes............................ 10 (11,142) (648) 141(4) (11,639)
------ ------- ------- ------- -------
Net income (loss).................. 301 (23,677) 3,517 220 (19,639)
====== ======= ======= ======= =======
Net income (loss) per
share -- basic................... (0.04)
Shares used in per share
computations -- basic............ 457,699
Net income (loss) per
share -- diluted................. (0.04)
Shares used in per share
computations -- diluted.......... 457,699
</TABLE>
---------------
(1) Original United States dollar amounts presented in Silicon Valley Group's
and WJ-Semiconductor Equipment Group's financial statements have been
converted into euros using the average historical exchange rate for the six
months ended June 30, 1999 of $1.00 = Euro 0.9461.
(2) Silicon Valley Group's and WJ-Semiconductor Equipment Group's results for
the six months ended March 31, 1999.
(3) Adjustment relates to the reclassification of installation and warranty
costs of Silicon Valley Group.
(4) Adjustments relate to the acquisition of the WJ-Semiconductor Equipment
Group by Silicon Valley Group on July 6, 1999.
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<PAGE> 76
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
HISTORICAL PRO
------------------------------ FORMA
WJ-SEMICONDUCTOR SILICON ASM PRO FORMA PRO FORMA U.S.
EQUIPMENT GROUP(1) VALLEY GROUP(1) LITHOGRAPHY ADJUSTMENTS COMBINED DOLLARS(2)
------------------ ---------------- ----------- ----------- --------- ----------
IN EUROS '000 (EXCEPT PER SHARE DATA)
---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net sales............... 89,743 438,495 1,197,490 -- 1,725,728 1,498,288
Cost of sales........... 55,902 289,114 798,040 42,163(3)
(117)(4) 1,185,102 1,028,913
------ ------- --------- ------- --------- ---------
Gross profit............ 33,841 149,381 399,450 (42,046) 540,626 469,375
Operating expenses:
Research and
development costs... 13,811 90,348 173,967 (243)(4) 277,883 241,260
Research and
development
credits............. (2,686) (36,128) -- (38,814) (33,699)
Selling, general and
administrative
expenses............ 16,365 101,191 140,182 (42,163)(3)
(170)(4) 215,405 187,016
------ ------- --------- ------- --------- ---------
Total expenses.......... 30,176 188,853 278,021 (42,576) 454,474 394,577
Operating income
(loss)................ 3,665 (39,472) 121,429 -- 86,152 74,798
Interest (income)
expense, net and other
income................ (331) (4,817) 3,150 530 (1,998) (1,735)
------ ------- --------- ------- --------- ---------
Income (loss) before
income taxes.......... 3,996 (34,655) 118,279 530 88,150 76,533
Provision (benefit) for
income taxes.......... 1,279 (11,090) 37,529 206 27,924 24,244
------ ------- --------- ------- --------- ---------
Net income (loss)....... 2,717 (23,565) 80,750 324 60,226 52,289
====== ======= ========= ======= ========= =========
Net income per share --
basic................. 0.13 0.11
Shares used in per share
computations -- basic... 458,542 458,542
Net income per share --
diluted............... 0.13 0.11
Shares used in per share
computations -- diluted.. 462,682 462,682
</TABLE>
---------------
(1) Original United States dollar amounts presented in Silicon Valley Group's
and WJ-Semiconductor Equipment Group's financial statements have been
converted into euros using the average historical exchange rate for the year
ended December 31, 1999 of $1.00 = Euro 0.9257.
(2) Solely for the convenience of the reader, certain euro amounts presented as
of and for the six months ended June 30, 2000 have been translated into
United States dollars using the exchange rate in effect on October 10, 2000
of $1.00 = Euro 1.1518.
(3) Adjustment relates to the reclassification of installation and warranty
costs of Silicon Valley Group.
(4) Adjustments relate to the acquisition of the WJ-Semiconductor Equipment
Group by Silicon Valley Group on July 6, 1999.
70
<PAGE> 77
UNAUDITED PRO FORMA CONDENSED COMBINED CASH FLOW STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 1999
The following Unaudited Pro Forma Condensed Combined Cash Flow Statement is
presented solely for the purpose of complying with the requirements of the
Official Segment of the stock market of Euronext Amsterdam N.V. It does not
reflect the inclusion of the historical cash flow statements of the acquired
business of the Semiconductor Equipment Group of Watkins-Johnson Company. The
Regulations of the United States Securities and Exchange Commission do not
require the inclusion of pro forma statements of cash flows, and therefore this
information does not purport to comply with the requirements of the Securities
and Exchange Commission.
<TABLE>
<CAPTION>
HISTORICAL
-------------------------- PRO
SILICON FORMA
VALLEY GROUP ASM PRO FORMA PRO FORMA U.S.
(1)(2) LITHOGRAPHY ADJUSTMENTS COMBINED DOLLARS(3)
------------ ----------- ----------- --------- ----------
IN EUROS '000
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CASH FLOW FROM OPERATIONS:
Net income (loss)........................ (23,565) 80,750 57,185 49,649
Depreciation and amortization............ 45,513 42,516 88,029 76,427
Change in assets and liabilities......... (19,233) (85,184) (104,417) (90,656)
------- -------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES............................. 2,715 38,082 40,797 35,420
CASH FLOWS FROM INVESTING ACTIVITIES:
Net capital expenditures................. (28,638) (127,918) (156,556) (135,923)
Purchases of short-term investments,
available for sales.................... (50,703) -- (50,703) (44,021)
Maturities of short-term investments,
available for sales.................... 36,635 -- 36,635 31,806
Net cash received from SEG acquisition... 129 -- 129 112
Other investing activities............... -- 7,858 7,858 6,822
------- -------- -------- --------
NET CASH USED IN INVESTING ACTIVITIES.... (42,578) (120,060) (162,638) (141,204)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of convertible
subordinated bonds..................... -- 516,765 516,765 448,659
Payment of underwriting commission....... -- (12,860) (12,860) (11,165)
Proceeds from issuance of shares and
stock options.......................... 18,436 31,609 50,045 43,450
Other financing activities............... (796) -- (796) (691)
NET CASH PROVIDED BY FINANCING
ACTIVITIES............................. 17,640 535,514 553,154 480,252
------- -------- -------- --------
Effect of changes in exchange rates on
cash................................... (930) (1,459) (2,389) (2,074)
------- -------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS............................ (23,153) 452,077 428,924 372,394
---------- --------- -------- --------
---------- --------- -------- --------
</TABLE>
---------------
(1) Original United States dollar amounts presented in Silicon Valley Group's
financial statements have been converted into euros using the average
historical exchange rate for the year ended December 31, 1999 of $1.00 =
0.9257 Euro.
(2) For Silicon Valley Group, figures for the year ended September 30, 1999 are
included.
(3) Solely for the convenience of the reader, certain amounts presented as of
and for the year ended December 31, 1999 have been translated into United
States dollars using the exchange rate in effect on October 10, 2000 of
$1.00 = Euro 1.1518.
71
<PAGE> 78
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------
SILICON ASM PRO FORMA PRO FORMA
VALLEY GROUP(1) LITHOGRAPHY ADJUSTMENTS COMBINED
--------------- ----------- ----------- ---------
IN EUROS '000 (EXCEPT PER SHARE DATA)
-------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales.......................................... 521,957 779,196 -- 1,301,153
Cost of sales...................................... 350,240 481,588 55,830(2) 887,658
------- ------- ------- ---------
Gross profit....................................... 171,717 297,608 (55,830) 413,495
Operating expenses:
Research and development costs................... 85,133 144,651 -- 229,784
Research and development credits................. (10,289) (29,965) -- (40,254)
Selling, general and administrative expenses..... 112,017 94,210 (55,830)(2) 150,397
Restructuring and related charges................ 12,489 -- 12,489
------- ------- ------- ---------
Total expenses..................................... 199,350 208,896 (55,830) 352,416
Operating income (loss)............................ (27,633) 88,712 -- 61,079
Interest (income) expense, net and other income.... (4,343) (1,218) -- (5,561)
------- ------- ---------
Income (loss) before income taxes.................. (23,290) 89,930 -- 66,640
Provision (benefit) for income taxes............... (11,646) 27,930 -- 16,284
------- ------- ---------
------- ------- ---------
Net income (loss).................................. (11,644) 62,000 -- 50,356
----------- --------- --------
----------- --------- --------
Net income per share -- basic...................... 0.11
Shares used in per share computations -- basic..... 456,216
Net income per share -- diluted.................... 0.11
Shares used in per share computations -- diluted... 458,811
</TABLE>
---------------
(1) Original United States dollar amounts presented in Silicon Valley Group's
financial statements have been converted into euros using the fixed exchange
rate effective upon the implementation of the Euro on January 1, 1999 of
$1.00 = Euro 0.8576.
(2) Adjustment relates to the reclassification of installation and warranty
costs of Silicon Valley Group.
72
<PAGE> 79
UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
HISTORICAL
-----------------------------
SILICON ASM PRO FORMA PRO FORMA
VALLEY GROUP(1) LITHOGRAPHY ADJUSTMENTS COMBINED
--------------- ----------- ----------- ---------
IN EUROS '000 (EXCEPT PER SHARE DATA)
---------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales........................................ 526,760 817,952 -- 1,344,712
Cost of sales.................................... 324,271 474,260 56,283(2) 854,814
------- ------- ------- ---------
Gross profit..................................... 202,489 343,692 (56,283) 489,898
Operating expenses:
Research and development costs................. 70,562 93,136 -- 163,698
Research and development credits............... (6,833) (13,613) -- (20,446)
Selling, general and administrative expenses... 115,469 57,611 (56,283)(2) 116,797
Settlement of royalty obligation............... 27,942 -- -- 27,942
------- ------- ------- ---------
Total expenses................................... 207,140 137,134 (56,283) 287,991
Operating income (loss).......................... (4,651) 206,558 -- 201,907
Gain on marketable securities.................... -- (14,130) -- (14,130)
Interest (income) expense, net and other
income......................................... (8,251) (714) -- (8,965)
------- ------- ---------
Income (loss) before income taxes and minority
interest....................................... 3,600 221,402 -- 225,002
Provision (benefit) for income taxes............. 1,298 72,109 -- 73,407
Minority interest................................ 79 79
------- ------- ---------
Net income (loss)................................ 2,223 149,293 -- 151,516
----------- --------- --------
----------- --------- --------
Net income per share -- basic.................... 0.33
Shares used in per share computations -- basic... 454,683
Net income per share -- diluted.................. 0.33
Shares used in per share
computations -- diluted........................ 455,684
</TABLE>
---------------
(1) Original United States dollar amounts presented in Silicon Valley Group's
financial statements have been converted into euros using the fixed exchange
rate effective upon the implementation of the Euro on January 1, 1999 of
$1.00 = Euro 0.8576.
(2) Adjustment relates to the reclassification of installation and warranty
costs of Silicon Valley Group.
73
<PAGE> 80
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED
FINANCIAL INFORMATION
(a) BASIS OF PRESENTATION. While the fiscal year end of Silicon Valley Group
differs from ASM Lithography's, this difference is less than 93 days.
Accordingly, the unaudited pro forma condensed combined statements of operations
for the years ended December 31, 1999, 1998 and 1997 combine the audited
consolidated financial statements of ASM Lithography for the years ended
December 31, 1999, 1998 and 1997 with the audited consolidated financial
statements of Silicon Valley Group for the years ended September 30, 1999, 1998
and 1997.
The unaudited pro forma condensed combined statements of operations for the
six months ended June 30, 2000 and 1999 combine the unaudited condensed
consolidated financial statements of ASM Lithography for the six months ended
June 30, 2000 and 1999 with the unaudited condensed consolidated financial
statements of Silicon Valley Group for the six months ended March 31, 2000 and
1999.
The pro forma condensed statements of operations for the year ended
December 31, 1999 and the six months ended June 30, 1999 include the unaudited
statements of operations of the WJ-Semiconductor Equipment Group prior to its
acquisition on July 6, 1999 by Silicon Valley Group in a transaction accounted
for using the purchase method of accounting.
The unaudited pro forma condensed combined balance sheet as of June 30,
2000 combines the unaudited condensed consolidated balance sheets as of June 30,
2000 of ASM Lithography and Silicon Valley Group.
All amounts in the unaudited pro forma condensed combined statements of
operations are stated in thousands of euros. The amounts derived from the
above-mentioned Silicon Valley Group year end financial statements have been
translated from United States dollars into euros using the respective exchange
rate in effect on December 31, 1999, 1998 and 1997. Income statements are based
on the average historical exchange rates for the years ended December 31, 1999,
1998 and 1997. The amounts derived from the Silicon Valley Group unaudited
financial statements as of June 30, 2000 and 1999 have been translated from
United States dollars into euros using the exchange rates in effect on June 30,
2000 and June 30, 1999, respectively. Income statements are based on the average
historical exchange rates for the six months ended June 30, 2000 and 1999.
Effective for the fiscal year 1999, ASM Lithography changed its reporting
currency from Dutch guilders to euros. Prior year balances have been restated
based on the fixed exchange rate effective January 1, 1999 of Euro 1.00 to NLG
2.20371. The comparative balances reported in euros depict the same trends as
would have been presented if ASM Lithography had continued to present balances
in Dutch guilders. Balances for periods prior to January 1, 1999 are not
comparable to the balances of other companies that report in euros having
restated amounts from a different currency than Dutch guilders. Solely for the
convenience of the reader, certain amounts presented for the year ended 1999 and
for the six months ended June 30, 2000 have been translated into United States
dollars using the exchange rate in effect on October 10, 2000 of $1.00 = Euro
1.1518.
In the opinion of ASM Lithography and Silicon Valley Group management, all
adjustments and/or disclosures necessary for a fair presentation of the pro
forma data have been made. These unaudited pro forma condensed combined
financial information are presented for illustrative purposes only and are not
necessarily indicative of the operating results or the financial position that
would have been achieved had the merger been consummated as of the dates
indicated or of the results that may be obtained in the future.
(b) ACCOUNTING POLICIES AND FINANCIAL STATEMENT CLASSIFICATION. The accounting
policies of ASM Lithography and Silicon Valley Group are substantially
comparable and both financial statements have been prepared in accordance with
generally accepted accounting principles in the United States. Certain
reclassifications in the consolidated statements of operations of Silicon Valley
Group have been made to
74
<PAGE> 81
conform to the line item presentation in the unaudited pro forma condensed
combined statements of operations.
Certain assets and liabilities in the consolidated balance sheet of Silicon
Valley Group have been reclassified to conform to the line item presentation in
the unaudited pro forma condensed combined balance sheet.
The unaudited pro forma condensed combined financial information has been
prepared based on the accounting policies of ASM Lithography and Silicon Valley
Group in effect for the related historical periods and, as discussed above, such
policies are substantially comparable. ASM Lithography and Silicon Valley Group
will be required to adopt the provisions of the Securities and Exchange
Commission Staff Accounting Bulletin (SAB) No. 101, "Revenue Recognition" in
their future fiscal years ending December 31, 2000 and September 30, 2001,
respectively. If the merger is completed as planned, Silicon Valley Group would
be required to adopt SAB 101 in its fiscal year ended September 30, 2000 when
such financial statements are combined with ASM Lithography's December 31, 2000
financial statements under the pooling of interests accounting method in filings
after consummation of the merger.
Under both companies existing revenue recognition policies, revenue from
sales of products based on existing technologies is recognized when the customer
takes title to the product, generally at the time of shipment. Costs for the
companies to install equipment in the customers' facilities are accrued at the
time the product revenue is recognized. The companies have historically
recognized revenue prior to installation as the installation costs, and the
related estimated fair value, are insignificant relative to the sales price and
gross profit of the transaction. In addition, the companies have a long history
of successful installations within a short timeframe of delivery and the cost to
complete installation do not vary materially from one instance to another.
Revenue is deferred on initial shipments of new products based on new
technologies until after customer acceptance. SAB No. 101 permits companies to
treat the installation of equipment as a separate earnings process if such
installation is not essential to the functionality of the equipment. The
companies have concluded that, in most cases, installation is not essential to
the functionality of their equipment. The equipment is generally available as a
standard product with options, the installation does not significantly alter the
equipment's capabilities and, in certain instances, other companies are
available to perform the installation. In those instances where installation is
essential to the functionality, the companies will defer revenue until after the
installation is complete. In any case, the installation obligation would not be
considered inconsequential under SAB No. 101 because under most of the
companies' contracts the timing of payment of a portion of the sales price
coincides with installation. The companies believe that they have an enforceable
claim for that portion of the sales price not related to the fair value of the
installation should they not fulfill the installation obligation in those cases
where installation is not essential to the functionality of the equipment. The
companies believe that the portion of the sales price paid after installation
bears no relationship to the fair value of the installation services. For
example, while the installation effort does not vary materially from customer to
customer, individual customer arrangements may vary from 100 percent of the sale
due upon shipment to 80 percent due upon shipment and 20 percent due after
installation. Accordingly, under SAB No. 101 the companies will defer the fair
value of the installation services until installation is complete. The combined
company will determine the fair value of such services based on its prices for
similar services to customers (e.g., service repairs and maintenance) and, where
applicable, prices charged by third parties for such installation services.
Neither company has yet determined the effect that the adoption of SAB No.
101 will have on their results of operations or financial position because this
will require information regarding the number of incomplete installations for
ASM Lithography as of December 31, 1999 and 2000 and, information regarding the
number of incomplete installations for Silicon Valley Group as of September 30,
2000 and September 30, 2001 (if the merger is not consummated) and as of
September 30, 1999 and September 30, 2000 (if the merger is consummated). Such
information for future dates can not be reasonably estimated and such
information for Silicon Valley Group for its historical dates has not been
assembled due to its requirement being introduced solely by this proposed
merger.
75
<PAGE> 82
(c) PRO FORMA EARNINGS PER SHARE. The pro forma combined basic earnings per
share is based on net income (loss) and the weighted average number of
outstanding ordinary shares. Diluted income per share includes the dilutive
effect of outstanding stock options.
The weighted average number of outstanding ordinary shares has been
adjusted to reflect the exchange ratio of 1.286 ordinary shares of ASM
Lithography for each share of common stock of Silicon Valley Group. The total
number of shares outstanding has been retroactively adjusted to reflect ASM
Lithography's two-for-one share splits in May 1997 and May 1998 and
three-for-one share split in April 2000.
(d) MERGER RELATED EXPENSES. Charges of approximately Euro 40.4 million for
direct incremental merger-related transaction costs will be recorded during the
twelve months after the merger is consummated. The direct incremental
merger-related transaction costs consist principally of charges related to
investment banking fees, professional services, integration consulting,
registration and other regulatory costs.
(e) ACQUISITION OF WJ-SEMICONDUCTOR EQUIPMENT GROUP. On July 6, 1999 Silicon
Valley Group completed the acquisition of the WJ-Semiconductor Equipment Group
with total consideration based upon the closing balance sheet as of July 2,
1999. The acquisition was accounted for using the purchase method. Accordingly,
the purchase price was allocated to the assets acquired and liabilities assumed
based on the estimated fair value as of the acquisition date. The allocation of
the purchase price is as follows:
<TABLE>
<S> <C>
Cash paid, net................................ $ 2,700,000
Acquisition costs............................. 1,400,000
------------
$ 4,100,000
============
Cash assumed.................................. $ 3,889,000
Inventory..................................... 14,112,000
Other current assets.......................... 1,521,000
Fixed assets.................................. 20,897,000
Current liabilities assumed................... (16,777,000)
Current portion long term debt assumed........ (585,000)
Long term debt assumed........................ (18,957,000)
------------
$ 4,100,000
============
</TABLE>
The estimated fair value of the net assets acquired exceeded the purchase
price of $4,100,000 by $7,325,000. Accordingly, the estimated fair value of the
fixed assets acquired of $28,222,000 was adjusted to $20,897,000.
Pro forma adjustments relating to this acquisition have been made in the
unaudited condensed pro forma statements of operations for the year ended
December 31, 1999 and the six months ended June 30, 1999 to:
- Reflect a net reduction in depreciation resulting from the reduction of
the fair value of the fixed assets by $7,325,000, as discussed above,
partially offset by the write up of fixed assets to fair value.
- Reflect the net change in operating expenses resulting from removal of
the depreciation on the real property located in Scotts Valley and
replacement with the operating lease payments. A third party purchased
the Scotts Valley facility from Watkins-Johnson Company and entered into
an operating lease arrangement with Silicon Valley Group for the
facility.
- Reflect the adjustment to income taxes based on the pro forma results for
the periods presented.
76
<PAGE> 83
(f) OTHER PRO FORMA ADJUSTMENTS. A pro forma adjustment has been made to
reflect the assumed issuance of approximately 44 million ordinary shares of ASM
Lithography in exchange for all of the outstanding Silicon Valley Group common
stock (based on the exchange ratio of 1.286 and the closing price of ASM
Lithography shares on October 9, 2000). The actual number of ASM Lithography
ordinary shares to be issued in connection with the merger will be based on the
number of shares of Silicon Valley Group common stock issued and outstanding or
issuable pursuant to stock options or convertible securities at the completion
of the merger.
Furthermore, a pro forma adjustment has been made to reclassify certain
installation and warranty costs of Silicon Valley Group to conform to the line
item presentation of ASM Lithography in the unaudited pro forma condensed
combined statement of operations.
77
<PAGE> 84
COMPARISON OF RIGHTS OF ASM LITHOGRAPHY SHAREHOLDERS
AND SILICON VALLEY GROUP STOCKHOLDERS
The rights of Silicon Valley Group stockholders are currently governed by
Delaware corporate law and Silicon Valley Group's restated certificate of
incorporation and by-laws. Upon completion of the merger, Silicon Valley Group
stockholders will become shareholders of ASM Lithography and their rights as ASM
Lithography shareholders will be governed by Dutch corporate law and ASM
Lithography's articles of association. There are a number of differences between
the rights of ASM Lithography shareholders and Silicon Valley Group
stockholders. The following is a brief summary of the material difference
between the rights of Silicon Valley Group stockholders and the rights of ASM
Lithography shareholders, and is qualified in its entirety by reference to the
relevant provisions of Delaware corporate law and Dutch corporate law and by
Silicon Valley Group's certificate of incorporation and by-laws and ASM
Lithography's articles of association, which documents are incorporated by
reference as exhibits to the registration statement of which this proxy
statement-prospectus is a part.
<TABLE>
<CAPTION>
PROVISIONS APPLICABLE PROVISIONS APPLICABLE
TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
AUTHORIZED CAPITAL
The total number of shares of all classes of stock The authorized capital ("maatschappelijk kapitaal")
that Silicon Valley Group is authorized to issue is of ASM Lithography amounts to Euro 36,000,462.00
101,000,000, of which 1,000,000 are shares of and is divided into 900,000,000 ordinary shares,
preferred stock and 100,000,000 are shares of 900,000,000 cumulative preferred shares, and 23,100
common stock. On August 31, 2000, there were 15,000 priority shares, each with a nominal value of Euro
shares of series 1 preferred stock outstanding and 0.02. On August 31, 2000, there were 418,848,000
34,077,272 shares of Silicon Valley Group common ASM Lithography ordinary shares and 23,100 priority
stock outstanding. shares issued and outstanding, while no cumulative
preferred shares were outstanding. The 23,100
priority shares are held by the Stichting
Prioriteitsaandelen ASM Lithography, a Netherlands
foundation with a self-electing board, consisting
of members of the board of management and of the
supervisory board of ASM Lithography. The object of
the foundation is to secure the interests of ASM
Lithography and all other related stakeholders,
more particularly to protect the independence and
identity of ASM Lithography and its related
companies to the greatest extent possible.
According to ASM Lithography's articles of
association, two members of this foundation are
appointed by the board of management of ASM
Lithography from its own members, and the remaining
board members are appointed by the supervisory
board of ASM Lithography from its own members.
ISSUANCE OF SHARES
Silicon Valley Group's certificate of incorporation With the approval of the supervisory board and the
and by-laws do not prohibit Silicon Valley Group holders of priority shares, the board of management
from issuing additional Silicon Valley Group common of ASM Lithography has the power to issue ordinary
stock or shares and preferred
</TABLE>
78
<PAGE> 85
<TABLE>
<CAPTION>
PROVISIONS APPLICABLE PROVISIONS APPLICABLE
TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
ISSUANCE OF SHARES (CONTINUED)
preferred stock. Under the merger agreement, shares if this power is approved by the general
however, Silicon Valley Group is prohibited from meeting of the shareholders. On March 23, 2000, the
issuing additional Silicon Valley Group common general meeting of shareholders authorized the
stock or Silicon Valley Group preferred stock, board of management to issue shares and/or rights
except for Silicon Valley Group common stock issued thereto through September 23, 2001 of up to 10% of
pursuant to options and other awards outstanding the issued share capital, increased by an
under Silicon Valley Group's stock plans or as additional 10% of the issued share capital in
otherwise permitted under the merger agreement. relation to mergers and acquisitions.
VOTING RIGHTS
Under Delaware law, each stockholder is entitled to Under Dutch Law, each shareholder is entitled to
one vote for each share of capital stock held by one vote per share, unless the articles of
that stockholder unless the certificate of association of the company provides otherwise.
incorporation provides otherwise. In addition, the Generally, all resolutions may be adopted by a
certificate of incorporation may provide for majority of the total votes cast at a general
cumulative voting at all elections of directors of meeting of ASM Lithography shareholders, unless
the corporation. Dutch law requires a qualified majority.
Holders of Silicon Valley Group common stock are Holders of ASM Lithography ordinary, preferred and
entitled to one vote per share of common stock. The priority shares are entitled to one vote per share.
Silicon Valley Group restated certificate of
incorporation does not provide for cumulative
voting.
Under Delaware law and the Silicon Valley Group Under Dutch law and ASM Lithography's articles of
restated certificate of incorporation and bylaws, association, certain corporate actions, including
certain corporate actions, including the adoption the issuance of shares, the waiver of preemptive
of certain mergers, the approval of amendments to rights, amendments to the ASM Lithography articles
the restated certificate of incorporation and the of association, the ratification of the financial
decision to dissolve Silicon Valley Group, require statements, the approval of the payment of certain
the approval of the holders of a majority of the dividends and the decision to wind up ASM
issued and outstanding shares of common stock of Lithography, require the approval of the meeting of
Silicon Valley Group before Silicon Valley Group the ASM Lithography ordinary shareholders before
can act. Additionally, Silicon Valley Group common ASM Lithography can act. However, while ASM
stockholders vote for the election of directors to Lithography shareholders may recommend persons to
serve on the board of directors. Ordinary corporate serve as members, they do not vote to elect the
actions, including the issuance of authorized members of the ASM Lithography supervisory board.
shares, the approval of the financial statements Instead, the members of the supervisory board are
and the payment of dividends, require only the appointed by the other members of the supervisory
approval of the Silicon Valley Group board of board.
directors.
Although the priority shareholders do not have the
authority to direct ASM Lithography to take a
particular action, their approval is required prior
to the ordinary shareholders taking certain
actions, including the winding up of ASM
Lithography, certain issuances of shares, the
amendment of its articles of
</TABLE>
79
<PAGE> 86
<TABLE>
<CAPTION>
PROVISIONS APPLICABLE PROVISIONS APPLICABLE
TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
VOTING RIGHTS (CONTINUED)
association, the exclusion of preemptive rights in
respect of ordinary shares and the making of
distributions to shareholders.
AMENDMENT OF CHARTER DOCUMENTS
Under Delaware law, amendments to a corporation's Under Dutch law, shareholders of a Dutch company
certificate of incorporation require a may resolve to amend the company's articles of
recommendation by the board of directors, followed association, although a statement of no-objection
by the approval of a majority of the votes entitled must be obtained from the Dutch Ministry of Justice
to be cast and a majority of the outstanding stock for any such amendment.
of each class entitled to vote on such amendments,
voting as a class. Resolutions to amend the articles of association,
if proposed by the board of management, must be
Under Delaware law, a company's by-laws may be approved by a majority of the votes cast at a
amended only by the stockholders, unless the general meeting of shareholders and, if proposed by
company's certificate of incorporation also confers shareholders, must be approved by at least a
the power to amend the by-laws on the directors. three-fourths majority of the votes cast at a
general meeting of shareholders at which more than
The Silicon Valley Group board of directors is half of the issued share capital is represented or,
expressly authorized to make, alter, amend, or if the requisite capital is not represented, by a
repeal the Silicon Valley Group by-laws. three-fourths majority of the votes cast at a new
meeting held within four weeks thereafter, at which
meeting there are no quorum requirements. All such
resolutions must, in either case, be approved by
the supervisory board and the meeting of priority
shareholders.
SHAREHOLDERS' MEETINGS
Under Delaware law, an annual meeting of Under Dutch law, a company must hold at least one
stockholders must be held for the election of annual general meeting of shareholders no later
directors on a date and at a time designated by or than six months after the end of the financial
in the manner provided in the by-laws. Any other year. Pursuant to the ASM Lithography articles of
proper business may be transacted at the annual association, general meetings may also be held as
meeting. The Silicon Valley Group by-laws provide often as the board of management or the supervisory
that the Silicon Valley Group board of directors board deems necessary. In addition, under Dutch law
must fix the date, time and place of the meeting; and the ASM Lithography articles of association, a
provided that the date so designated must be within general meeting of shareholders must be held if
five months after the end of Silicon Valley Group's shareholders representing at least one-tenth of the
fiscal year and within thirteen months of the last issued share capital or the meeting of priority
annual meeting of stockholders. shareholders in writing request the board of
management and the supervisory board to call such a
meeting. Pursuant to ASM Lithography's articles of
association, a general meeting of shareholders will
be held at least once a year in The Netherlands,
not later than six months after the end of the
fiscal year. Notice of the general
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SHAREHOLDERS' MEETINGS (CONTINUED)
meeting of shareholders is published in a newspaper
in The Netherlands and in the Official Price List
of Euronext Amsterdam. Notice of the general
meeting is also mailed to holders of registered New
York shares at least 15 days before the annual
meeting. In order to attend, to address, and to
vote at the general meeting of shareholders, the
holders of registered New York shares must notify
ASM Lithography in writing of their intention to do
so. ASM Lithography does not solicit from or
nominate proxies for its shareholders and is exempt
from the Securities and Exchange Commission's proxy
rules under the Securities Exchange Act of 1934 and
the Nasdaq National Market's proxy rules. However,
holders of registered New York shares may be
represented by proxies obtained upon request from
the Morgan Guaranty Trust Company of New York. If a
shareholder cannot attend the meeting in person and
is unable to find a suitable person to vote their
proxy in The Netherlands, ABN AMRO Bank N.V., the
Dutch exchange agent, will endeavor to find a
suitable person to vote for such shareholder. For
more information on registered New York shares, see
"Share Certificates and Transfer" on page 96.
SPECIAL MEETINGS
Under Delaware law, a special meeting of Under Dutch law, special, or extraordinary, general
stockholders may be called by the board of meetings of shareholders may be convened by the
directors or by any other person authorized in the board of management or the supervisory board, but
certificate of incorporation or the by-laws. the articles of association may also vest this
Delaware law does not provide stockholders with an power in other persons. In addition, one or more
automatic right to call special meetings of shareholders, who own together at least 10% -- or
stockholders. The Silicon Valley Group by-laws such lesser amount as is provided by the articles
provide that a special meeting of stockholders may of association -- of the issued capital, can call a
be called by either the board of directors, the special general meeting of shareholders.
chairman of the board of directors, the president
or one or more stockholders holding shares in the Pursuant to ASM Lithography's articles of
aggregate entitled to cast not less than 10% of the association, special meetings of shareholders may
votes at that meeting. be held whenever the ASM Lithography board of
management or supervisory board calls such
meetings, subject to the specific requirements
under Dutch law. In addition, one or more
shareholders, who own together at least 10% of the
issued capital or the meeting of
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priority shareholders, can in writing request the
board of management and the supervisory board to
call a special general meeting of shareholders.
QUORUM FOR SHAREHOLDERS MEETINGS
Under Delaware law, either the certificate of Under Dutch law, the validity of shareholder
incorporation or the by-laws may specify the number decisions is not dependent on a quorum, unless the
of shares and/or the amount of other securities law or the articles of association stipulate
that must be represented at a meeting in order to otherwise. ASM Lithography's articles of
constitute a quorum, but in no event will a quorum association do not impose any quorum requirements.
consist of less than one-third of the shares
entitled to vote at a meeting. However, if less than half of the issued share
capital is represented during an ASM Lithography
The presence in person, or by properly executed general meeting, resolutions by such general
proxy, of holders of a majority of the outstanding meeting to authorize the ASM Lithography board of
shares of the stock issued and outstanding and management to limit or exclude the shareholders'
entitled to vote at the meeting is required to pre-emptive rights or to reduce capital, require a
constitute a quorum at stockholders meetings of majority of two-thirds of the votes cast at such
Silicon Valley Group. general meeting.
ACTION BY WRITTEN CONSENT OF SHAREHOLDERS
Under Delaware law, unless otherwise provided in a Under Dutch law, resolutions may be adopted by the
corporation's certificate of incorporation, any unanimous consent of all of the shareholders in
action that may be taken at a meeting of writing without holding a meeting of shareholders,
stockholders may be taken without a meeting, provided the articles of association expressly so
without prior notice and without a vote, if the allow and provided no bearer shares are issued.
holders of outstanding stock having no less than
the minimum number of votes that would be necessary With respect to ASM Lithography's ordinary shares,
to authorize such action at a meeting consent in ASM Lithography has issued bearer shares, and,
writing. accordingly, the general meeting of shareholders of
ASM Lithography may not adopt resolutions by
The Silicon Valley Group by-laws confirm the right written consent. With respect to priority and
of its stockholders to act by written consent. preferred shares, the articles of association
expressly allow such shareholders to adopt
resolutions by written consent.
ELECTION OF DIRECTORS AND FILLING OF VACANCIES
Under Delaware law, the board of directors of a ASM Lithography has a board of management and a
corporation must consist of one or more members. supervisory board. The board of management is
The number of directors must be fixed by, or in entrusted with the day-to-day management of ASM
the manner provided in, the by-laws, unless the Lithography. The supervisory board supervises the
certificate of incorporation fixes the number of board of management and the general affairs and
directors. Each director shall hold office until business of ASM Lithography, and advises the board
his or her successor is elected and qualified or of management. The number of managing directors
until his or her earlier resignation or removal. must be no less than two
The directors are
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TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
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ELECTION OF DIRECTORS AND FILLING OF VACANCIES (CONTINUED)
elected at the annual meeting of stockholders. The with the exact number to be determined by the
directors may be divided into one, two or three meeting of holders of priority shares in
classes. consultation with the supervisory board.
The Silicon Valley Group by-laws provide that the There are 5 members of the supervisory board and 5
number of directors shall be no less than four and members of the board of management.
no more than seven. Silicon Valley Group has one
class of directors. ASM Lithography is subject to the so-called large
company regime ("structuurregime") under Dutch law
Silicon Valley Group currently has six directors. and is required to have at least three supervisory
directors with the exact number to be determined at
Delaware law provides that vacancies and the general meeting of shareholders at the proposal
newly-created directorships may be filled by a of the meeting of holders of priority shares.
majority of the directors then in office (even
though less than a quorum) unless either: Under Dutch law and ASM Lithography's articles of
association, members of the board of management are
- otherwise provided in the certificate of appointed by the supervisory board, subject to
incorporation or by-laws of the corporation prior notification of the general meeting of
or shareholders.
- the certificate of incorporation directs Under Dutch law and ASM Lithography's articles of
that a particular class of stock is to elect association, members of the supervisory board are
such director, in which case any other appointed by the supervisory board. The general
directors elected by such class, or a sole meeting of shareholders, the works council and the
remaining director elected by such class, board of management are notified of an existing
shall fill such vacancy. vacancy in the supervisory board and have the
authority to make non-binding recommendations to
Silicon Valley Group's restated certificate of the supervisory board. The supervisory board is
incorporation does not alter this. authorized to appoint a person that is not
recommended by the general meeting of shareholders,
the works council or the board of management unless
the general meeting of shareholders or the works
council formally objects to such an appointment.
Upon such an objection, the supervisory board may
still proceed with their appointment if the
Enterprise Chamber of the Amsterdam Court of Appeal
decides the objection was unfounded.
Under Dutch law, members of the supervisory board
of a company subject to the large company regime
such as ASM Lithography are appointed for a period
of four years unless the articles of association
provide for a longer period, and may be re-elected.
Each supervisory director is required to resign on
the date of the annual general meeting of
shareholders in the year in which such director
attains the age of
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TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
ELECTION OF DIRECTORS AND FILLING OF VACANCIES (CONTINUED)
72. A Dutch company may provide in its articles of
association that the appointment and resignation of
members of the board of management and the
supervisory board will be staggered. ASM
Lithography's articles of association permit the
supervisory board to establish such a rotation
schedule.
REMOVAL OF DIRECTORS
Delaware law provides that a director may be Dutch law and ASM Lithography's articles of
removed with or without cause by the holders of a association provide that the supervisory board has
majority of the shares then entitled to vote at the authority to remove members of the board of
an election of directors, except that: management upon completion of a hearing of the
general meeting of shareholders.
(1) members of a classified board of directors
may be removed only for cause, unless the Under ASM Lithography's articles of association, a
certificate of incorporation provides member of the ASM Lithography board of management
otherwise; and can be suspended by the ASM Lithography supervisory
board at any time; provided that, within three
(2) directors may not be removed in certain months of the suspension, a general meeting of
situations in the case of a corporation having shareholders must be held to determine if the
cumulative voting. member should be removed. If no general meeting of
shareholders is called within this three-month
Silicon Valley Group's restated certificate of period, the suspension automatically lapses.
incorporation does not provide for either such
limitation on removal. Members of the ASM Lithography supervisory board
may be suspended by the supervisory board; provided
that such suspension will lapse within one month if
the supervisory board has not petitioned the
Enterprise Chamber of the Amsterdam Court of Appeal
for the removal of such member.
SHAREHOLDER NOMINATIONS
The Silicon Valley Group by-laws provide that Under Dutch law and the ASM Lithography articles of
stockholders may nominate individuals for election association, the general meeting of shareholders,
to the board of directors at a meeting of Silicon the works council and the board of management are
Valley Group stockholders entitled to vote for the notified of an existing vacancy in the supervisory
election of directors. In order to nominate an board and have the authority to make non-binding
individual, a stockholder must deliver written recommendations to the supervisory board.
notice to the secretary of Silicon Valley Group not
less than 60 days nor more than 90 days prior to ASM Lithography's articles of association provide
the meeting; provided, that in the event that less that when the appointment of a member of the
than 45 days' notice or prior public disclosure of supervisory board is notified by the supervisory
the date of the meeting is given or made to board, such notification must state the candidate's
stockholders, notice by the stockholder, to be age, profession, the number of shares he or she
timely, must be so received not later than the holds in ASM Lithography's share capital and the
close of business offices he
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TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
SHAREHOLDER NOMINATIONS (CONTINUED)
on the tenth day following the day on which such or she holds or has held, insofar as the latter are
notice of the date of the meeting was mailed or of importance to the performance of duties as a
such public disclosure was made. The written notice member of the supervisory board.
must set forth:
- the name, age, business address and
residence address of such person
- the principal occupation of the nominee
- the number of shares of Silicon Valley Group
beneficially owned by such nominee,
- any other information relating to such
person that is required to be disclosed in
solicitations of proxies for election of
directors, or is otherwise required
(including, without limitation, such
person's written consent to being named in
the proxy statement as a nominee and to
serving as a director, if elected).
If the chairman of the meeting determines that a
nomination was not made in accordance with the
prescribed procedures, the chairman may so declare
to the meeting, and the defective nomination will
be disregarded.
APPRAISAL RIGHTS
Delaware law provides for appraisal rights for Dutch law does not recognize the concept of
shares of stock that are listed on a national appraisal or dissenters' rights and, accordingly,
securities exchange in connection with mergers and holders of shares in a Dutch company have no
consolidations; if the terms of the agreement of appraisal rights.
merger or consolidation require the shareholders to
accept anything except: (i) shares of stock of the
corporation surviving or resulting from such merger
or consolidation, or depositary receipts in respect
thereof; (ii) shares of stock of any other
corporation, or depositary receipts in respect
thereof, which will be either listed on a national
securities exchange or designated as a national
market system security on an interdealer quotation
system by the National Association of Securities
Dealers, Inc., or held of record by more than 2,000
holders; (iii) cash in lieu of fractional shares or
fractional depositary
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TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
APPRAISAL RIGHTS (CONTINUED)
receipts; or (iv) any combination of (i), (ii) and
(iii) above.
PRE-EMPTIVE RIGHTS
Under Delaware law, stockholders have no pre- Under Dutch law, holders of ordinary shares in a
emptive rights to subscribe to additional issues of company have pre-emptive rights with respect to
stock or to any security convertible into such newly issued ordinary shares in proportion to the
stock unless such rights are expressly provided for aggregate nominal value of their shareholdings,
in the certificate of incorporation. The Silicon with the exception of shares to be issued to
Valley Group restated certificate of incorporation employees of the company or of a group company.
does not provide for pre-emptive rights. However, the articles of association of ASM
Lithography state that the holders of ASM
Lithography ordinary shares have no pre-emptive
rights to subscribe for ASM Lithography ordinary
shares issued for non-cash consideration. ASM
Lithography's articles of association do not
provide for pre-emptive rights for the holders of
preferred shares, and currently, holders of
preferred shares have no pre-emptive rights.
Pre-emptive rights in respect of newly issued
ordinary shares may be limited or excluded by
approval of the shareholders at the general meeting
of shareholders. In addition, under Dutch law,
pre-emptive rights may be limited or excluded by a
resolution of the board of management, upon
approval by the supervisory board and the meeting
of priority shareholders, if the general meeting of
shareholders, or the articles of association upon
amendment to that effect, have conferred this power
on the board of management. This power may be
conferred for a maximum period of five years and
may from time to time be extended, but never for a
period longer than five years.
On March 23, 2000, the general meeting of
shareholders authorized the board of management to
exclude or limit pre-emptive rights arising as a
result of an issue of shares through September 23,
2001. The holders of ASM Lithography ordinary
shares have no pre-emptive rights to subscribe for
ASM Lithography ordinary shares to be issued for
non-cash consideration (including the ASM
Lithography ordinary shares issued in the merger).
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<S> <C>
DIVIDENDS
Under Delaware law, a Delaware corporation may pay Dutch law provides that dividends may be
dividends out of its surplus (the excess of net distributed only after adoption of a company's
assets over capital), or in case there is no annual accounts by its shareholders. Under Dutch
surplus, out of its net profits for the fiscal year law, the supervisory board of a company subject to
in which the dividend is declared and/or the the large company regime adopts the annual
preceding fiscal year (provided that the amount of accounts, subject to the subsequent approval or
the capital of the corporation is not less than the rejection by the general meeting of shareholders.
aggregate amount of the capital represented by the If the general meeting of shareholders rejects the
issued and outstanding stock of all classes having annual accounts, no dividends may be distributed.
a preference upon the distribution of assets). Moreover, dividends may be distributed only to the
extent that net assets exceed the sum of the amount
of issued and paid-up capital and reserves which
must be maintained under Dutch law or the articles
of association. Interim dividends may be declared
as provided for in the articles of association and
may be distributed to the extent that net assets
exceed the amount of the issued and paid-up capital
plus required legal reserves. Under Dutch law, the
articles of association may prescribe that the
board of management and/or the supervisory board
decide what portion of the profits are to be held
as reserves. If ASM Lithography does pay any cash
dividends on its ordinary shares, it will appoint a
paying agent and make a public announcement to that
effect.
ASM Lithography's articles of association provide
that the ASM Lithography board of management, after
receiving approval of the ASM Lithography
supervisory board, may determine what portion of
the profits are to be held as reserves. The
remainder of the profits can be distributed to the
shareholders, as determined by the general meeting
of shareholders and subject to all of the following
requirements:
- dividends may be distributed only up to the
extent shareholders' equity exceeds the amount of
the issued share capital plus the reserve
maintained pursuant to Dutch law
- dividends may be distributed only after adoption
of the annual accounts from which it appears that
payment of the dividends is permissible
- the ASM Lithography board of
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TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
DIVIDENDS (CONTINUED)
management, after receiving approval from
the ASM Lithography supervisory board and the
meeting of holders of priority shares, may
resolve to pay an interim dividend.
Upon proposal of the ASM Lithography board of
management, after receiving approval of the ASM
Lithography supervisory board and of the meeting of
holders of priority shares, the general meeting may
resolve to make distributions to the charge of
"other reserves" shown in the annual accounts or
charged to "share premium reserve" and/or to make
distributions not in cash but in shares in ASM
Lithography.
REPURCHASE AND CANCELLATION OF COMPANY SHARES
Under Delaware law, a corporation may redeem or Dutch law and the articles of association of ASM
repurchase its own shares, except that a Lithography provide that ASM Lithography (or its
corporation cannot generally make such a purchase subsidiaries) may not subscribe for newly issued
or redemption if it would cause impairment of its shares in its own capital. ASM Lithography (or its
capital. subsidiaries) may purchase fully paid-up shares in
its own capital, if:
- the distributable part of the shareholders'
equity is at least equal to the acquisition
price; and
- the nominal value of the shares acquired by, held
by or pledged to ASM Lithography (or its
subsidiaries) does not exceed 10% of the nominal
value of the then outstanding issued share
capital.
Pursuant to the foregoing procedures, the board of
management is authorized, subject to the foregoing
approval of the supervisory board, to repurchase up
to 10% of the issued share capital of ASM
Lithography through September 23, 2001 at a price
between the par value of the ordinary shares
purchased and 110% of the average market price of
these securities on the Amsterdam Stock Exchange
for the five trading days prior to such repurchase.
Ordinary shares held by the company may be resold.
Upon the proposal of the board of
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TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
REPURCHASE AND CANCELLATION OF COMPANY SHARES (CONTINUED)
management, made with approval of the supervisory
board and the meeting of priority shareholders, the
general meeting of shareholders can have the power
to decide to cancel ordinary shares repurchased by
ASM Lithography. Any such proposal is subject to
general requirements of Netherlands law with
respect to reduction of capital, which includes a
two-month waiting period during which creditors may
oppose the contemplated reduction of capital.
LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS
Delaware law permits a corporation to include in The concept of indemnification of directors of a
its certificate of incorporation a provision company for liabilities arising from their actions
eliminating or limiting a director's personal as members of the board of management or
liability to the corporation or its stockholders supervisory board is, in principle and with limited
for monetary damages for breaches of fiduciary exceptions, accepted in The Netherlands and
duty. However, Delaware law expressly provides that sometimes provided for in a company's articles of
the liability of a director may not be eliminated association.
or limited for (i) breaches of a director's duty of
loyalty to the corporation or its stockholders, The articles of association of ASM Lithography
(ii) acts or omissions not in good faith or which contain no provision under which any member of the
involve intentional misconduct or a knowing supervisory board or board of management or
violation of law, (iii) the unlawful purchase or officers is indemnified in any manner against any
redemption of stock or unlawful payment of liability which he or she may incur in his or her
dividends or (iv) any transaction from which the capacity as such. However, the articles of
director derived an improper personal benefit. association provide that at each ordinary annual
Delaware law further provides that no such general meeting of shareholders, the shareholders
provision shall eliminate or limit the liability of may discharge the supervisory board and the board
a director for any act or omission occurring prior of management from liability for the performance of
to the date when such provision becomes effective. their respective duties in the preceding financial
The Silicon Valley Group certificate of year.
incorporation contains a provision eliminating
director liability to the extent permitted by
Delaware law.
Generally, Delaware law permits a corporation to
indemnify certain persons made a party to any
action, suit or proceeding by reason of the fact
that such person is or was a director, officer,
employee or agent of the corporation or is or was
serving at the request of the corporation as a
director, officer, employee or agent of another
corporation or enterprise if that person acted in
good faith and in a manner the person reasonably
believed to be in or not opposed to the best
interests of the corporation.
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TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
LIMITATION OF DIRECTORS' LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS (CONTINUED)
To the extent that person has been successful in
any such matter, that person shall be indemnified
against expenses actually and reasonably incurred.
In the case of an action by or in the right of the
corporation, no indemnification may be made in
respect of any matter as to which that person was
adjudged liable to the corporation unless and only
to the extent that the Delaware Court of Chancery
or the court in which the action was brought
determines that despite the adjudication of
liability that person is fairly and reasonably
entitled to indemnity for proper expenses. The
by-laws of Silicon Valley Group require Silicon
Valley Group to indemnify its directors, officers
and employees to the maximum extent permitted by
law.
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS
Under Delaware law, the vote of a majority of the ASM Lithography's articles of association do not
outstanding shares of capital stock entitled to expressly require the approval of the general
vote thereon generally is necessary to approve a meeting of shareholders of reorganizations or
merger or a consolidation. Delaware law permits a mergers in which ASM Lithography would not be the
corporation to include in its certificate of surviving entity, but by virtue of the application
incorporation a provision requiring for any of Dutch statutory law, a merger or reorganization
corporate action the vote of a larger portion of involving ASM Lithography and in which ASM
the stock or of any class or series thereof than Lithography would not be the surviving entity is
would otherwise be required. subject to the approval of the ASM Lithography
general meeting of shareholders by a majority of
Under Delaware law, no vote of the stockholders of the votes cast at such meeting at which more than
a surviving corporation to a merger is needed, half of the issued share capital is represented. If
unless required by the certificate of less than half of the issued share capital is
incorporation, if all of the following is true: represented at the meeting, the resolution will be
passed only by the affirmative vote of at least
- the agreement of merger does not amend in two-thirds of the votes cast.
any respect the certificate of incorporation
of the surviving corporation All resolutions to wind up ASM Lithography must be
approved by the supervisory board and the meeting
- the shares of stock of the surviving of priority shareholders. Such a resolution also
corporation are not changed in the merger must be passed by at least a three-fourths majority
of the votes cast at a general meeting of
- the number of shares of common stock of the shareholders at which more than half of the issued
surviving corporation into which any other share capital is represented or, if the requisite
shares, securities or obligations to be capital is not represented, by a three-fourths
issued in the merger may be converted does majority of the votes cast at a new meeting held
not exceed 20% of the surviving within four weeks thereafter, at which meeting
corporation's common shares there are no
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TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
REQUIRED VOTE FOR AUTHORIZATION OF CERTAIN ACTIONS (CONTINUED)
outstanding immediately prior to the quorum requirements. Such resolutions can also be
effective date of the merger. proposed by the board of management, in which case
the resolution must be approved by a simple
In addition, stockholders of a Delaware corporation majority of the votes cast at a general meeting of
may not be entitled to vote in certain mergers with shareholders.
other corporations that own 90% or more of the
outstanding shares of each class of stock of such
corporation.
CERTAIN PROVISIONS RELATING TO BUSINESS COMBINATIONS
Delaware law generally prevents a corporation from Neither Dutch law nor ASM Lithography's articles of
entering into certain business combinations association specifically prevent business
(which include a merger or sale of more than 10% of combinations with interested shareholders. However,
the corporation's assets) with an "interested general principles of Dutch law may restrict
stockholder" (defined generally to include any business combinations under certain circumstances.
person or entity that is the beneficial owner of at
least 15% of a corporation's outstanding voting
stock or certain of its affiliates within a
three-year period immediately prior to the time
that such stockholder became an "interested
stockholder"), unless either:
- the business combination or the transaction
which resulted in the stockholder becoming
an "interested stockholder" is approved by
the board of directors of the corporation,
prior to such time as the stockholder became
an "interested stockholder", or
- the interested stockholder acquired at least
85% of the corporation's voting stock in the
same transaction in which it became an
"interested stockholder", or
- at or subsequent to such time in which the
stockholder became an "interested
stockholder", the business combination is
approved by the board of directors and
authorized at an annual or special meeting
of stockholders, and not by written consent,
by a vote of 66 2/3% of the outstanding
voting stock not owned by the interested
stockholder.
SHAREHOLDER RIGHTS PLANS
Silicon Valley Group has entered into a rights ASM Lithography does not have a shareholder rights
agreement pursuant to which Silicon Valley Group plan for ordinary shareholders. However, an option
has issued rights to its stockholders to purchase to purchase preferred shares has been granted to
shares of Silicon Valley Group the Preference Shares Foundation
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<TABLE>
<CAPTION>
PROVISIONS APPLICABLE PROVISIONS APPLICABLE
TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
SHAREHOLDER RIGHTS PLANS (CONTINUED)
common stock. These rights are exercisable in ("Stichting Preferente Aandelen ASM Lithography
limited circumstances and are intended to encourage Holding N.V."), which has been established in
a person seeking to acquire control of Silicon accordance with Dutch law and Euronext Amsterdam
Valley Group to negotiate with its board of N.V. rules and has as its object "the promotion of
directors. The rights agreement has been amended by the interests of ASM Lithography and the
Silicon Valley Group to expressly permit the enterprises maintained by it in such a way that the
proposed merger. interests of ASM Lithography and those enterprises
and of all concerned are guaranteed as much as
possible, and to minimize influences which, in
conflict with these interests, could affect the
independence and identity of ASM Lithography and
those enterprises, as well as everything which is
connected with or could be conducive to the above".
The board of directors of the Preference Shares
Foundation is independent of ASM Lithography and is
composed of three voting members drawn from the
Dutch business and academic communities, as well as
the chairman of ASM Lithography's supervisory board
and the chairman of ASM Lithography's board of
management, who are non-voting members.
Full exercise of the option to purchase preferred
shares would effectively dilute the voting power of
the ordinary shares then outstanding by one half.
The practical effect of any such exercise could be
to prevent attempts by third-parties to acquire
control of ASM Lithography, even at a price that
represents a substantial premium to the then
current market price of the ordinary shares.
RIGHTS OF INSPECTION
Under Delaware law, any stockholder may inspect, Under Dutch law, the annual accounts of a company
for a purpose reasonably related to such person's are submitted to the general meeting of
interest as a stockholder, the corporation's stock shareholders for their adoption. Prior to such
ledger, a list of its stockholders and its other meeting of shareholders, the annual accounts of a
books and records during the corporation's usual company are available for inspection by the
hours for business. shareholders at the offices of the company. Under
Dutch law, the shareholders' register is available
for inspection by the shareholders. The register
for holders of registered shares traded on the
Nasdaq National Market is available for inspection
at the office of ASM Lithography's New York
transfer agent. The register for holders of
registered shares other than New York registered
shares is available
</TABLE>
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<PAGE> 99
<TABLE>
<CAPTION>
PROVISIONS APPLICABLE PROVISIONS APPLICABLE
TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
RIGHTS OF INSPECTION (CONTINUED)
for inspection at ASM Lithography's offices in
Veldhoven. However, the majority of ASM
Lithography's ordinary shares are held in bearer
form for which no register is maintained.
Pursuant to Dutch law and to ASM Lithography's
articles of association, the members of ASM
Lithography's supervisory board are authorized to
inspect the books and records of ASM Lithography,
and are permitted access to the buildings and
premises of ASM Lithography.
SHAREHOLDER SUITS
Under Delaware law, a stockholder may bring a Dutch law does not provide an exact equivalent of
derivative action on behalf of the corporation to derivative suits or class action suits.
enforce the rights of the corporation. An Shareholders cannot act on behalf of the company
individual also may commence a class action suit on (as in a derivative suit) without a power of
behalf of himself and other similarly situated attorney. However, Dutch law does allow legal
stockholders where the requirements for maintaining proceedings to be instituted by a group of
a class action under Delaware law have been met. A interested parties ("belanghebbenden") (as in a
person may institute and maintain such a suit only class action). For example, shareholders could set
if such person was a stockholder at the time of the up a foundation ("stichting") and cause this
transaction that is the subject of the suit or his foundation to bring an action on their behalf
or her stock thereafter desolved upon him or her by against a company or its management, on the basis
operation of law. Additionally, under Delaware case of powers of attorney from the interested parties.
law, the plaintiff generally must be a stockholder
not only at the time of the transaction that is the
subject of the suit, but also through the duration
of the derivative suit. Delaware law also requires
that the derivative plaintiff make a demand on the
directors of the corporation to assert the
corporate claim before the suit may be prosecuted
by the derivative plaintiff, unless such demand
would be futile.
SHAREHOLDER PROPOSALS
The Silicon Valley Group by-laws provide that ASM Lithography's articles of association provide
stockholder proposals of business may be made at that the agenda for the general meeting of the
any stockholder meeting pursuant to the notice of shareholders may include shareholder proposals when
meeting, by or at the direction of the board of made by one or more shareholders entitled to attend
directors or by a stockholder. To bring a proposal the meetings who own at least one-tenth of the
of business before a stockholder meeting, the issued capital of ASM Lithography. In order for the
stockholder must give notice in writing to the item to be included on the agenda, the shareholder
Secretary of Silicon Valley Group not less than 60 must request its addition at least four (4) weeks
days nor more than 90 days prior to the meeting; before the day the notice of the meeting is
provided, that in the event that less than 45 days' published.
notice or prior
</TABLE>
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<PAGE> 100
<TABLE>
<CAPTION>
PROVISIONS APPLICABLE PROVISIONS APPLICABLE
TO SILICON VALLEY GROUP STOCKHOLDERS TO ASM LITHOGRAPHY SHAREHOLDERS
<S> <C>
SHAREHOLDER PROPOSALS (CONTINUED)
public disclosure of the date of the meeting is
given or made to stockholders, notice by the
stockholder to be timely must be so received not
later than the close of business on the tenth day
following the day on which such notice of the date
of the stockholder meeting was mailed or such
public disclosure was made. The written notice must
contain:
- a brief description of the business desired
to be brought before the annual meeting and
the reasons for conducting such business at
the annual meeting
- the name and address of the stockholder
proposing such business
- the number of shares beneficially owned by
such stockholder
- any material interest of such stockholder in
such business
CONFLICT-OF-INTEREST TRANSACTIONS
Delaware law generally permits transactions Under Dutch law, unless the articles of association
involving a Delaware corporation and an interested of a company provide otherwise, the company will be
director of that corporation if any of the represented by the supervisory board members in
following is true: case of a conflict of interest between the company
and one or more of its management board members.
- the material facts as to his relationship or Currently, ASM Lithography's articles of
interest are disclosed and a majority of association do not contain any contrary provision.
disinterested directors consents In addition, the general meeting of shareholders is
entitled to appoint someone else as the
- the material facts are disclosed as to his representative of the company.
relationship or interest and a majority of
shares entitled to vote thereon consents
- the transaction is fair to the corporation
at the time it is authorized by the board of
directors, a committee of the board of
directors or the stockholders
</TABLE>
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<PAGE> 101
<TABLE>
<S> <C>
FINANCIAL INFORMATION AVAILABLE TO SHAREHOLDERS
ASM Lithography and Silicon Valley Group are each required to file periodic reports with the Securities and
Exchange Commission containing certain financial information. Silicon Valley Group files annual reports on
Form 10-K that contain audited financial statements prepared in accordance with United States generally
accepted accounting principles and quarterly reports on Form 10-Q which contain unaudited quarterly financial
statements prepared in accordance with United States generally accepted accounting principles, but subject to
normal year-end adjustments. ASM Lithography files annual reports on Form 20-F which contain annual financial
statements prepared in accordance with United States generally accepted accounting principles and furnishes
interim reports on Form 6-K which contain information it publishes in The Netherlands or makes generally
available to shareholders. This includes unaudited semiannual financial statements prepared in accordance
with United States generally accepted accounting principles. Silicon Valley Group's financial information is
available electronically with the Securities and Exchange Commission. The address of that site is
http://www.sec.gov. ASM Lithography is not required to and does not file electronically with the Securities
and Exchange Commission.
</TABLE>
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<PAGE> 102
SHARE OWNERSHIP BY PRINCIPAL STOCKHOLDERS, MANAGEMENT AND
DIRECTORS OF SILICON VALLEY GROUP
The following table sets forth information concerning beneficial ownership
of common stock of Silicon Valley Group as of September 29, 2000 for the
following:
- each person or entity who is known by Silicon Valley Group to own
beneficially more than 5% of the outstanding shares of Silicon Valley
Group common stock
- each of Silicon Valley Group's current directors
- the chief executive officer and certain other highly compensated officers
of Silicon Valley Group
- all directors and executive officers of Silicon Valley Group as a group
The number and percentage of shares beneficially owned is determined in
accordance with Rule 13d-3 of the Exchange Act and the information is not
necessarily indicative of beneficial ownership for any other purpose. Under such
rule, beneficial ownership includes any shares as to which the individual or
entity has voting power or investment power and any shares that the individual
has the right to acquire within 60 days of September 29, 2000 through the
exercise of any stock option or other right. Unless otherwise indicated in the
footnotes or table, each person or entity has sole voting and investment power
(or shares such powers with his or her spouse) with respect to the shares shown
as beneficially owned and has an address of c/o Silicon Valley Group, 101 Metro
Drive, Suite 400, San Jose, California 95110.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
NAME OF BENEFICIAL OWNERSHIP PERCENT(1)
---- ----------------------- ----------
<S> <C> <C>
EQSF Advisers, Inc. ....................................... 5,436,700 15.70%
Capital Guardian Trust..................................... 1,809,400 5.2%
Papken S. Der Torossian.................................... 811,191(2) 2.31%
William A. Hightower....................................... 319,602(3) *
Michael J. Attardo......................................... 30,000(4) *
William L. Martin.......................................... 55,950(5) *
Lawrence Tomlinson......................................... 26,250(6) *
Nam P. Suh................................................. 41,250(7) *
John Shamaly............................................... 82,579(8) *
Russell G. Weinstock....................................... 161,720(9) *
Jeffrey M. Kowalski........................................ 181,918(10) *
Boris Lipkin............................................... 45,682(11) *
All directors and executive officers as a group (11
persons)................................................. 1,914,986(12) 5.29%
</TABLE>
---------------
* Less than 1%
(1) Computed on the basis of 34,547,167 shares of common stock of Silicon Valley
Group outstanding as of September 29, 2000 plus, with respect to those
persons holding warrant or options to purchase Common Stock exercisable
within 60 days of September 29, 2000, the number of shares of common stock
that are issuable upon exercise thereof.
(2) Includes 560,867 shares subject to options which are exercisable within 60
days of September 29, 2000 and 7,500 shares held by Mr. Der Torossian's
daughter, as to which shares he disclaims beneficial ownership.
(3) Includes 319,602 shares subject to options which are exercisable within 60
days of September 29, 2000.
(4) Includes 30,000 shares subject to options which are exercisable within 60
days of September 29, 2000.
(5) Includes 51,250 shares subject to options which are exercisable within 60
days after September 29, 2000.
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<PAGE> 103
(6) Includes 26,250 shares subject to options which are exercisable within 60
days after September 29, 2000.
(7) Includes 41,250 shares subject to options which are exercisable within 60
days after September 29, 2000.
(8) Includes 82,579 shares subject to options which are exercisable within 60
days after September 29, 2000.
(9) Includes 157,121 shares subject to options which are exercisable within 60
days after September 29, 2000.
(10) Includes 173,135 shares subject to options which are exercisable within 60
days after September 29, 2000.
(11) Includes 44,203 shares subject to options which are exercisable within 60
days after September 29, 2000.
(12) Includes 1,635,494 shares subject to options which are exercisable within
60 days after September 29, 2000.
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<PAGE> 104
SHARE CERTIFICATES AND TRANSFER
ASM Lithography ordinary shares are issuable in bearer or registered form,
as the holder may elect, except that shares traded on the Nasdaq National Market
are issued in the form of shares of New York registry, referred to as New York
shares. The ASM Lithography ordinary shares issued pursuant to the merger will
be registered New York shares and quoted on the Nasdaq National Market under the
symbol "ASML". New York shares are registered with the New York Transfer Agent
and Registrar, Morgan Guaranty Trust Company of New York, 60 Wall Street, New
York, New York 10260, and are represented by certificates printed in the English
language. Ordinary shares registered in The Netherlands are in book-entry form
(Veldhoven Register). Ordinary shares issued in bearer form are represented by
certificates printed in the Dutch language with a dividend sheet attached
(CF-certificates) and are traded on the Official Segment of the stock market of
Euronext Amsterdam N.V. under the symbol "ASML". CF-certificates must remain
deposited with an authorized custodian and may only be transferred through the
book-entry transfer system maintained by NECIGEF (Nederlands Centraal Instituut
Voor Giraal Effectenverkeer B.V.).
Ordinary shares booked in the Veldhoven Register may be converted into
bearer ordinary shares or into New York shares. In addition, upon surrender of
bearer shares at the principal office of ABN AMRO Bank N.V., the Dutch exchange
agent, accompanied by a request that those bearer shares be exchanged for New
York shares, the Dutch exchange agent will instruct the New York transfer agent
and registrar to issue New York shares and to deliver the corresponding
certificates. Similarly, on presentation to the New York transfer agent and
registrar of New York shares for cancellation and accompanied by an appropriate
request, the New York transfer agent and registrar will instruct the Dutch
exchange agent in The Netherlands to issue and deliver bearer shares for the
same number of ordinary shares. Bearer shares and New York shares may upon
cancellation also be exchanged into ordinary shares booked in the Veldhoven
Register. Certificates for New York shares may be exchanged at the office of the
New York transfer agent and registrar for certificates of other authorized
denominations. A fee of $0.05 per share is charged to shareholders for the
exchange of New York shares for bearer shares or for ordinary shares booked in
the Veldhoven Register and vice versa.
Bearer shares have been accepted for clearance through Cedel and Euroclear
System (Common Code 5607493 and ISIN NL0000334332). The Fonds Code on the
Official Segment of the stock market of the Euronext Amsterdam N.V. is 33433.
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<PAGE> 105
LEGAL OPINION
At the request of ASM Lithography, Clifford Chance LLP will render a legal
opinion as to the validity of the issuance of the ASM Lithography ordinary
shares. The support for the discussion set forth under "Certain United States
Federal Income Tax Consequences of the Merger" in this proxy statement-
prospectus and the federal income tax consequences of the merger to Silicon
Valley Group, ASM Lithography and their respective shareholders will be passed
upon for Silicon Valley Group by Wilson Sonsini Goodrich & Rosati, Professional
Corporation, and for ASM Lithography by Skadden, Arps, Slate, Meagher and Flom
LLP.
EXPERTS
The consolidated financial statements of ASM Lithography and Silicon Valley
Group incorporated in this prospectus by reference to ASM Lithography's Annual
Report on Form 20-F for the year ended December 31, 1999 and Silicon Valley
Group's Annual Report on Form 10-K for the year ended September 30, 1999 have
been audited by Deloitte & Touche Accountants and Deloitte & Touche LLP,
independent auditors, respectively, as stated in their reports which are
incorporated by reference, and have been so incorporated in reliance upon the
reports of such firms given upon their authority as experts in accounting and
auditing.
GENERAL INFORMATION
ASM Lithography came into existence on October 3, 1994 as ASM Lithography
Holding B.V. Its articles of association were altered on February 7, 1995,
whereby ASM Lithography Holding B.V. was converted into ASM Lithography Holding
N.V. The articles of association were last amended on April 10, 2000. ASM
Lithography Holding N.V. is registered under number 85815 at the Commercial
Register in Eindhoven, The Netherlands.
The objects of ASM Lithography, as described in Article 2 of its articles
of association, are to establish, participate in, administer and finance
companies or enterprises engaged in the development, manufacture and trading of
lithographic products and systems and the development and exploitation of
technical and other expertise in the field of or in connection with such
products and systems, and to do everything pertaining thereto or connected
therewith, including to perform or have performed industrial and commercial
activities, as well as to perform or have performed services in general, all
this in the widest sense.
The ordinary shares of ASM Lithography in bearer form will be accepted for
delivery through the facilities of NECIGEF (Nederlands Centraal Instituut voor
Giraal Effectenverkeer B.V.), Morgan Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System and Clearstream, against
payment in immediately available funds. The ASM Lithography ordinary shares of
New York registry will be accepted for delivery through the facilities of The
Depository Trust Company, Euroclear System and Clearstream.
The Dutch Act on Disclosure of Holdings in Listed Companies (Wet melding
zeggenschap in ter beurze genoteerde vennootschappen 1996) provides that any
person, who, directly or indirectly, acquires or disposes of an interest in the
capital and/or the voting rights of a public limited liability company
incorporated under the laws of The Netherlands with an official listing on a
stock exchange within the European Economic Area must give a written notice of
such acquisition or disposal to the company and the Securities Board of The
Netherlands, if, as a result of such acquisition or disposal, the percentage of
capital interest or voting rights held by such person falls within another
bandwidth, as compared to the percentage held by such person prior to such
acquisition or disposal. The bandwidths referred to in the Dutch Act on
Disclosure of Holdings in Listed Companies are 0% to 5%; 5% to 10%; 10% to 25%;
25% to 50%; 50% to 66 2/3%; and over 66 2/3%.
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<PAGE> 106
Regulations under the Dutch Securities Market Supervision Act (Wet toezicht
effectenverkeer 1995) regarding insider trading provide, among other things, for
an additional notification duty for shareholders holding (directly or
indirectly) a capital interest of more than 25% in a company which has issued
securities listed on the Official Segment of the stock market of Euronext
Amsterdam N.V. Such shareholders are obliged to notify the Securities Board of
The Netherlands of any and all transactions that they carry out or cause to be
carried out in securities issued by the company in which they hold an interest
of over 25%. If a shareholder holding more than 25% is a legal entity and not an
individual, the obligation is extended to the managing directors and supervisory
directors of the legal entity. ASM Lithography has taken measures to implement
Rules for the Prevention of Insider Trading in accordance with article 46d of
the Dutch Securities Market Supervision Act.
Unless as may be disclosed in this proxy statement-prospectus, there has
been no material change in the financial condition of ASM Lithography's
operations since December 31, 1999.
ASM Lithography is responsible for the accuracy and completeness of the
information relating to ASM Lithography as reflected in this proxy
statement-prospectus. Having made reasonable inquiries, ASM Lithography confirms
that, to the best of its knowledge and belief as of the date of this proxy
statement-prospectus, the information contained in this proxy
statement-prospectus relating to ASM Lithography is accurate and this proxy
statement-prospectus does not omit to state any material fact relating to ASM
Lithography, the omission of which would make any information misleading.
Silicon Valley Group is responsible for the accuracy and completeness of
the information relating to Silicon Valley Group as reflected in this proxy
statement-prospectus. Having made reasonable inquiries, Silicon Valley Group
confirms that, to the best of its knowledge and belief as of the date of this
proxy statement-prospectus, the information contained in this proxy
statement-prospectus relating to Silicon Valley Group is accurate and this proxy
statement-prospectus does not omit to state any material fact relating to
Silicon Valley Group, the omission of which would make any information
misleading.
On February 8, 1999, ASM Lithography was notified by Capital Guardian Trust
Company, a California trust company, that it acts as investment manager to a
number of institutional accounts (primarily pension funds) that own an aggregate
of 37,249,800 (8.9%) of ASM Lithography's ordinary shares. In addition, ASM
Lithography has been informed by Royal Philips Electronics N.V. that it owns an
aggregate of 30,000,000 (7.2%) of ASM Lithography's ordinary shares. ASM
Lithography has not been notified of any other holdings that exceed 5% of its
shares.
The address of ASM Lithography's independent auditors, Deloitte & Touche
Accountants, is Busitel II, Orlyplein 50, 1043 DP, Amsterdam, The Netherlands.
Deloitte & Touche Accountants have served as ASM Lithography's independent
auditors for each of the last three years and have rendered unqualified audit
reports with respect to ASM Lithography's annual accounts for each of those
years.
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<PAGE> 107
STOCKHOLDER PROPOSALS FOR THE 2001
ANNUAL MEETING OF SILICON VALLEY GROUP STOCKHOLDERS
IF THE MERGER IS NOT COMPLETED
If the merger is not completed, you may present proper proposals for
consideration at the next annual meeting of Silicon Valley Group stockholders by
submitting your proposal in writing to the Secretary of Silicon Valley Group in
a timely manner.
Silicon Valley Group's by-laws establish an advance notice procedure for
stockholder proposals not included in Silicon Valley Group's proxy statement to
be brought before any meeting of stockholders. In general, nominations for the
election of directors or the proposal of any business may be made by:
- Silicon Valley Group's board of directors
- any nominating committee appointed by Silicon Valley Group's board of
directors
- any stockholder entitled to vote who has delivered written notice to the
Secretary of Silicon Valley Group no less than 60 days, nor more than 90
days, in advance of Silicon Valley Group's stockholder meeting, which
notice must contain specified information concerning the nominations for
the election of directors or proposed business to be brought at the
stockholder meeting and concerning the stockholder proposing the
nominations or business. If less than 45 days' notice or prior public
disclosure of the date of Silicon Valley Group's stockholder meeting is
given or made to stockholders, notice by the stockholder must be received
not later than the close of business on the tenth day following the day
on which notice of the date of the annual meeting was mailed
The only business that will be conducted at a meeting of Silicon Valley
Group stockholders is business that is brought before the meeting by or at the
direction of the board of directors of Silicon Valley Group or by any
stockholder entitled to vote who has delivered written notice to the Secretary
of Silicon Valley Group in a timely manner in accordance with the
above-described procedure.
A copy of the full text of the by-law provisions discussed above may be
obtained by writing to the Secretary of Silicon Valley Group. All notices of
proposals by stockholders, whether or not included in Silicon Valley Group's
proxy materials, should be sent to Silicon Valley Group, 101 Metro Drive, Suite
400, San Jose, California 95110, Attention: Secretary.
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<PAGE> 108
WHERE YOU CAN FIND MORE INFORMATION
THIS PROXY STATEMENT-PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED IN OR DELIVERED WITH THIS PROXY STATEMENT-PROSPECTUS.
The following documents, which were filed by ASM Lithography or Silicon
Valley Group with the Securities and Exchange Commission, are incorporated by
reference:
<TABLE>
<CAPTION>
ASM LITHOGRAPHY SEC FILINGS PERIOD
--------------------------- ------
<S> <C>
Annual Report on Form 20-F/A............................ Year ended December 31, 1999, as filed on
December 22, 2000
Current Report on Form 6-K.............................. Filed on October 2, 2000
Filed on July 20, 2000
Filed on June 15, 2000
The description of ASM Lithography ordinary shares set
forth
in ASM Lithography's registration statement filed by ASM
Lithography on Form 8-A pursuant to Section 12 of the
Securities Exchange Act of 1934, including any amendment Filed on February 14, 1995, including any
or report filed for the purpose of updating any such amendment or report filed for purposes of
description............................................. updating such description
</TABLE>
<TABLE>
<CAPTION>
SILICON VALLEY GROUP SEC FILINGS PERIOD
-------------------------------- ------
<S> <C>
Annual Report on Form 10-K.............................. Year ended September 30, 1999, as filed on
December 23, 1999
Quarterly Report on Form 10-Q........................... Quarter ended June 30, 2000, as filed on
August 14, 2000
Current Report on Form 8-K.............................. Filed on December 12, 2000
Filed on October 13, 2000
Filed on July 19, 1999
Current Report Filed on Form 8-K/A...................... Filed on September 17, 1999
</TABLE>
<TABLE>
<CAPTION>
The description of Silicon Valley Group's common stock set
forth in Silicon Valley Group's registration statement on
Form 8-A filed pursuant to Section 12 of the Securities
Exchange Act of 1934, including any amendment or report filed Filed on October 10, 1996, including
with the Securities and Exchange Commission for the purpose any amendment or report filed for
of updating any such description. purposes of updating such description
<S> <C>
The description of Silicon Valley Group's Preferred Share
Purchase Rights Plan set forth in Silicon Valley Group's
registration statement on Form 8-A filed pursuant to Section
12 of the Securities Exchange Act of 1934 including any Filed on September 25, 1996, including any
amendment or report filed for the purpose of updating any amendment or report filed for purposes of
such description.......................................... updating such description
</TABLE>
ASM Lithography and Silicon Valley Group incorporate by reference
additional documents that either company may file with the Securities and
Exchange Commission between the date of this proxy statement-prospectus and the
date of the special meeting of stockholders of Silicon Valley Group. These
documents include periodic reports, such as Annual Reports on Forms 10-K and
20-F, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and interim
reports on Form 6-K, as well as, in the case of Silicon Valley Group, proxy
statements.
Any statement contained in a document incorporated or deemed to be
incorporated by reference into this proxy statement-prospectus will be deemed to
be modified or superseded for purposes of this proxy statement-prospectus to the
extent that a statement contained in this proxy statement-prospectus or any
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<PAGE> 109
other subsequently filed document that is deemed to be incorporated by reference
into this proxy statement-prospectus modifies or supersedes the statement. Any
statement so modified or superseded will not be deemed, except as so modified or
superseded, to constitute a part of this proxy statement-prospectus.
The documents incorporated by reference into this proxy
statement-prospectus are available from us upon request. We will provide a copy
of any and all of the information that is incorporated by reference in this
proxy statement-prospectus to any person, without charge, upon written or oral
request. ANY REQUEST FOR DOCUMENTS SHOULD BE MADE BY JANUARY 24, 2001 TO ENSURE
TIMELY DELIVERY OF THE DOCUMENTS.
<TABLE>
<S> <C>
Requests for documents relating to ASM Requests for documents relating to Silicon
Lithography should be directed to: Valley
Group should be directed to:
ASM LITHOGRAPHY SILICON VALLEY GROUP
De Run 1110 101 Metro Drive, Suite 400
5503 LA Veldhoven San Jose, California 95110
The Netherlands Attention: Manager of Investor Relations
Attention: Investor Relations 1-408-467-5870
(+31 40) 268-3938
</TABLE>
Silicon Valley Group files annual, quarterly and special reports, proxy
statements and other information with the Securities and Exchange Commission
under the Securities Exchange Act of 1934. ASM Lithography files annual,
semiannual and special reports and other information with the Securities and
Exchange Commission under the Securities Exchange Act of 1934. ASM Lithography
is exempt from the proxy rules of the Securities and Exchange Commission under
the Securities Exchange Act of 1934 and is not required to solicit proxies or
prepare proxy statements for shareholders' meetings. You may read and copy this
information at the following locations of the Securities and Exchange
Commission:
<TABLE>
<S> <C> <C>
Public Reference Room North East Regional Office 7 Midwest Regional Office
450 Fifth Street, N.W. World Trade Center 500 West Madison Street
Room 1024 Suite 1300 Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
</TABLE>
You can also inspect reports, proxy statements and other information about
ASM Lithography and Silicon Valley Group at the offices of the National
Association of Securities Dealers, Inc., 9513 Key West Avenue, Rockville,
Maryland 20850.
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the Securities and Exchange Commission, 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549.
The Securities and Exchange Commission also maintains an Internet worldwide
web site that contains reports, proxy statements and other information about
issuers, like Silicon Valley Group, who file electronically with the Securities
and Exchange Commission. The address of that site is http://www.sec.gov. ASM
Lithography is not required to and does not file electronically with the
Securities and Exchange Commission.
ASM Lithography has filed a registration statement on Form F-4 under the
Securities Act with the Securities and Exchange Commission with respect to ASM
Lithography's ordinary shares to be issued to Silicon Valley Group stockholders
in the merger. This proxy statement-prospectus constitutes the prospectus of ASM
Lithography filed as part of that registration statement. This proxy statement-
prospectus does not contain all of the information set forth in the registration
statement because certain parts of the registration statement are omitted in
accordance with the rules and regulations of the Securities and Exchange
Commission. The registration statement and its exhibits are available for
inspection and copying as set forth above.
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If you have any questions about the merger, please call Silicon Valley
Group Investor Relations at 1-408-467-5870. You may also call ASM Lithography
Investor Relations at (+31 40) 268-3938.
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT
WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT.
THIS PROXY STATEMENT-PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROXY
STATEMENT-PROSPECTUS, OR THE SOLICITATION OF A PROXY, IN ANY JURISDICTION TO OR
FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER,
SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROXY STATEMENT-PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES
PURSUANT TO THIS PROXY STATEMENT-PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES,
CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET
FORTH OR INCORPORATED INTO THIS PROXY STATEMENT-PROSPECTUS BY REFERENCE OR IN
OUR AFFAIRS SINCE THE DATE OF THIS PROXY STATEMENT-PROSPECTUS. THE INFORMATION
CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS WITH RESPECT TO SILICON VALLEY
GROUP AND ITS SUBSIDIARIES WAS PROVIDED BY SILICON VALLEY GROUP AND THE
INFORMATION CONTAINED IN THIS PROXY STATEMENT-PROSPECTUS WITH RESPECT TO ASM
LITHOGRAPHY WAS PROVIDED BY ASM LITHOGRAPHY.
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STATEMENTS REGARDING FORWARD-LOOKING INFORMATION
This proxy statement-prospectus and the documents incorporated by reference
into this proxy statement-prospectus contain forward-looking statements within
the "safe harbor" provisions of the United States Private Securities Litigation
Reform Act of 1995. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates" and similar expressions identify
forward-looking statements. The forward-looking statements contained in this
proxy statement-prospectus include statements about future financial and
operating results and benefits of the pending merger between ASM Lithography and
Silicon Valley Group. Factors that could cause actual results to differ
materially from those described herein include: the inability to obtain
regulatory approvals; actions of the United States, The Netherlands and other
foreign and local governments; the inability to successfully integrate the
businesses of ASM Lithography and Silicon Valley Group; costs related to the
merger; labor integration issues; the economic environment of the semiconductor
industry; and the general economic environment. These forward-looking statements
are based on management's current expectations and are naturally subject to
uncertainty and changes in circumstances. Actual results may vary materially
from the expectations contained in this proxy statement-prospectus and these
forward-looking statements are not guarantees of future performance. Neither ASM
Lithography nor Silicon Valley Group is under any obligation to (and expressly
disclaims any obligation to) update or alter these forward-looking statements,
whether as a result of new information, future events or otherwise. In
evaluating the merger, you should carefully consider the discussion of risks and
uncertainties in the section entitled "Risk Factors" on page 19 of this proxy
statement-prospectus.
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ENFORCEABILITY OF CIVIL LIABILITIES
ASM Lithography is a Dutch public company with limited liability ("naamloze
vennootschap"), and the majority of the members of ASM Lithography's supervisory
board and board of management are residents of The Netherlands or countries
other than the United States. A substantial portion of ASM Lithography's assets
are located outside the United States. As a result, it may not be possible for
ASM Lithography's ordinary shareholders to effect service of process within the
United States upon ASM Lithography or such persons or to enforce against ASM
Lithography or such persons judgments of United States courts based upon civil
liabilities under the United States federal securities laws.
ASM Lithography has been advised by ASM Lithography's Dutch counsel,
Clifford Chance LLP, that the United States and The Netherlands do not currently
have a treaty providing for the reciprocal recognition and enforcement of
judgments (other than arbitration awards) in civil and commercial matters.
Therefore, a final judgment for the payment of money rendered by any federal or
state courts in the United States based on civil liability, whether or not
predicated solely upon the federal securities laws of the United States, would
not be directly enforceable in The Netherlands. However, if the party in whose
favor such final judgment is rendered brings a new suit in a competent court in
The Netherlands, that party may submit to the Dutch court the judgment of the
federal or state court in the United States and, if that judgment can be shown
to have been based on grounds that are internationally acceptable and through
the observation of proper legal procedures, the court in The Netherlands would,
under current practice, give binding effect to the final, definite judgment that
has been rendered in the United States, unless such judgment contravenes Dutch
public policy or an existing Dutch judgment.
Notwithstanding the foregoing, there can be no assurance that United States
investors will be able to enforce against ASM Lithography, or members of its
board of management or supervisory board, any judgments in civil and commercial
matters, including judgments under the federal securities laws. ASM Lithography
has been advised by its Dutch counsel, Clifford Chance LLP, that there is doubt
as to whether a Dutch court would impose civil liability on ASM Lithography or
the members of the board of management or supervisory board in an original
action based solely upon the federal securities laws of the United States
brought in a court of competent jurisdiction in The Netherlands against ASM
Lithography or such members.
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ANNEX A
ANNEX A -- AGREEMENT AND PLAN OF MERGER
--------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ASM LITHOGRAPHY HOLDING N.V.,
ALMA HOLDING, INC.,
ALMA (MERGER), INC.
AND
SILICON VALLEY GROUP, INC.
DATED AS OF OCTOBER 1, 2000
--------------------------------------------------------------------------------
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; INTERPRETATION
<TABLE>
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Section 1.01 Certain Defined Terms........................ A- 1
Section 1.02 Interpretation............................... A- 5
ARTICLE II
THE MERGER
Section 2.01 The Merger; Closing.......................... A- 6
Section 2.02 Certificate of Incorporation and By-Laws of
the Surviving Corporation.................... A- 6
Section 2.03 Directors and Officers of the Surviving
Corporation.................................. A- 6
Section 2.04 Tax and Accounting Consequences.............. A- 6
ARTICLE III
CONVERSION OF SHARES AND RELATED MATTERS
Section 3.01 Conversion of Capital Stock.................. A- 7
Section 3.02 Exchange of Shares........................... A- 7
Section 3.03 Exchange of Certificates..................... A- 8
Section 3.04 Company Stock Options and Stock Rights....... A-10
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.01 Due Organization, Good Standing and Corporate
Power........................................ A-11
Section 4.02 Authorization and Validity of Agreement...... A-12
Section 4.03 Capitalization............................... A-12
Section 4.04 Consents and Approvals; No Violations........ A-13
Section 4.05 Company Reports and Financial Statements..... A-14
Section 4.06 Information to Be Supplied................... A-14
Section 4.07 Absence of Certain Changes................... A-14
Section 4.08 Litigation................................... A-15
Section 4.09 Title to Properties; Encumbrances............ A-15
Section 4.10 Compliance with Laws......................... A-15
Section 4.11 Company Employee Benefit Plans............... A-15
Section 4.12 Employment Relations and Agreement........... A-17
Section 4.13 Taxes........................................ A-17
Section 4.14 Intellectual Property........................ A-18
Section 4.15 Material Contracts........................... A-18
Section 4.16 Environmental Matters........................ A-19
Section 4.17 State Takeover Statutes...................... A-20
Section 4.18 Broker's or Finder's Fee..................... A-20
Section 4.19 Voting Requirements; Board Approval.......... A-20
Section 4.20 The Company Rights Agreement................. A-21
Section 4.21 Opinion of Financial Advisor................. A-21
Section 4.22 Pooling-of-Interests; Reorganization......... A-21
</TABLE>
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<TABLE>
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES
Section 5.01 Due Organization, Good Standing and Corporate
Power........................................ A-21
Section 5.02 Authorization and Validity of Agreement...... A-22
Section 5.03 Capitalization............................... A-22
Section 5.04 Consents and Approvals; No Violations........ A-23
Section 5.05 Parent Reports and Financial Statements...... A-23
Section 5.06 Information to Be Supplied................... A-24
Section 5.07 Absence of Certain Changes................... A-24
Section 5.08 Broker's or Finder's Fee..................... A-24
Section 5.09 Ownership of Capital Stock................... A-24
Section 5.10 Pooling-of-Interests; Reorganization......... A-24
Section 5.11 Litigation................................... A-24
Section 5.12 Intellectual Property........................ A-24
Section 5.13 Compliance with Laws......................... A-25
ARTICLE VI
COVENANTS
Section 6.01 Conduct of the Business...................... A-25
Section 6.02 Access to Information Concerning Properties
and Records.................................. A-27
Section 6.03 Confidentiality.............................. A-27
Section 6.04 Company Stockholder Meeting; Preparation of
Proxy Statement.............................. A-28
Section 6.05 No Solicitation.............................. A-29
Section 6.06 Notification of Certain Matters.............. A-30
Section 6.07 Reasonable Best Efforts...................... A-30
Section 6.08 Consents..................................... A-31
Section 6.09 Antitrust Filings............................ A-31
Section 6.10 Indemnification; Directors' and Officers'
Insurance.................................... A-31
Section 6.11 Public Announcements......................... A-32
Section 6.12 NASDAQ....................................... A-32
Section 6.13 Rule 145/Pooling Affiliate Letters........... A-32
Section 6.14 Employee Benefits............................ A-32
Section 6.15 Takeover Statute............................. A-33
Section 6.16 Pooling-of-Interests; Tax Treatment.......... A-33
Section 6.17 Letters of Accountants....................... A-34
Section 6.18 Series 1 Preferred Stock..................... A-34
Section 6.19 Employment Agreements........................ A-34
Section 6.20 U.S. Operations.............................. A-34
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.01 Conditions to Each Party's Obligations to
Effect the Merger............................ A-34
Section 7.02 Conditions to Obligation of the Company to
Effect the Merger............................ A-35
Section 7.03 Conditions to Obligation of the Parent
Companies to Effect the Merger............... A-35
</TABLE>
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<TABLE>
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ARTICLE VIII
TERMINATION AND ABANDONMENT
Section 8.01 Termination.................................. A-36
Section 8.02 Effect of Termination........................ A-37
Section 8.03 Payment of Certain Fees...................... A-37
ARTICLE IX
MISCELLANEOUS
Section 9.01 Representations and Warranties............... A-38
Section 9.02 Extension; Waiver............................ A-38
Section 9.03 Notices...................................... A-38
Section 9.04 Entire Agreement............................. A-39
Section 9.05 Binding Effect; Benefit; Assignment.......... A-39
Section 9.06 Amendment and Modification................... A-39
Section 9.07 Headings..................................... A-39
Section 9.08 Enforcement.................................. A-39
Section 9.09 Expenses..................................... A-39
Section 9.10 Counterparts; Effectiveness.................. A-40
Section 9.11 Applicable Law............................... A-40
Section 9.12 Severability................................. A-40
Section 9.13 Waiver of Jury Trial......................... A-40
Section 9.14 No Strict Construction....................... A-40
Section 9.15 Forum Selection; Consent to Jurisdiction..... A-40
EXHIBITS -- [OMITTED]
Exhibit A -- Restated Certificate of Incorporation of the
Company
Exhibit B -- Company Rule 145/Pooling Affiliate Letter
Exhibit C -- Parent Rule 145/Pooling Affiliate Letter
Exhibit D -- Parent Officer's Certificate
Exhibit E -- Company Officer's Certificate
</TABLE>
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of October 1, 2000 (the
"Agreement"), is made by and among ASM Lithography Holding N.V., a Netherlands
public company (naamloze vennootschap) ("Parent"), ALMA Holding, Inc., a
Delaware corporation and a direct wholly owned subsidiary of Parent ("HoldCo"),
ALMA (Merger), Inc., a Delaware corporation and a direct wholly owned subsidiary
of HoldCo ("Merger Sub"), and Silicon Valley Group, Inc., a Delaware corporation
(the "Company").
WHEREAS, the Supervisory Board, the Board of Management and the Priority
Shareholder (Stichting Prioriteitsaandelen ASM Lithography Holding N.V.) of
Parent and the Boards of Directors of the Company, HoldCo and Merger Sub each
have determined that it is advisable and in the best interests of each
corporation and their respective stockholders to consummate the transactions
contemplated by this Agreement pursuant to which HoldCo will acquire the
Company, and accordingly have agreed to effect the acquisition through the
merger of Merger Sub with and into the Company (the "Merger"), with the Company
as the surviving corporation, upon the terms and subject to the conditions set
forth in this Agreement;
WHEREAS, by resolutions duly adopted, the Supervisory Board, the Board of
Management and the Priority Shareholder (Stichting Prioriteitsaandelen ASM
Lithography Holding N.V.) of Parent and the Boards of Directors of the Company,
HoldCo and Merger Sub have approved this Agreement and the transactions
contemplated hereby;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling-of-interests business combination.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties agree as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION
Section 1.01 Certain Defined Terms. When used in this Agreement, the
following terms shall have the respective meanings specified therefor below.
"Acquisition Agreement" shall have the meaning set forth in Section
6.05(b).
"AEX" means Amsterdam Exchanges N.V., the company operating the AEX-Stock
Exchange or any successor thereof.
"AEX Documents" shall have the meaning set forth in Section 6.04(c).
"AEX-Stock Exchange" means the Official Market of the stock exchange of
AEX.
"Affiliate" of any Person shall mean any Person directly or indirectly
controlling, controlled by, or under common control with, such Person; provided
that, for the purposes of this definition, "control" (including with correlative
meanings, the terms "controlled by" and "under common control with"), as used
with respect to any Person, shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities or partnership
interests, by contract or otherwise.
"Agreement" shall have the meaning set forth in the preamble hereto.
"Antitrust Law" shall mean all antitrust or competition Laws of the United
States or any other Governmental Authority (including the Sherman Act, as
amended, the Clayton Act, as amended, the
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HSR Act, and the Federal Trade Commission Act, as amended and any comparable
pre-merger notification Laws, rules, regulations or forms required by any merger
notification or control Laws, rules or regulations of any applicable foreign
jurisdiction, including the Netherlands), all applicable European antitrust
Laws, and all other federal, state and foreign statutes, rules, regulations,
orders, decrees, administrative and judicial doctrines, and other Laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
"Business Day" means a day other than a Saturday, a Sunday or a day on
which banks in New York, New York are permitted or required to close.
"Certificate" shall have the meaning set forth in Section 3.01(c).
"Certificate of Designations" shall have the meaning set forth in Section
6.18.
"Certificate of Merger" shall have the meaning set forth in Section
2.01(a).
"Cleanup" shall have the meaning set forth in Section 4.16(b)(i).
"Closing" shall have the meaning set forth in Section 2.01(b).
"Closing Date" shall have the meaning set forth in Section 2.01(b).
"Code" shall have the meaning set forth in the recitals hereto.
"Company" shall have the meaning set forth in the preamble hereto.
"Company Common Stock" shall mean the Company's common stock, par value
$0.01 per share, including the associated rights (the "rights") to purchase the
Series A Participating Preferred Stock of the Company issued pursuant to the
Rights Agreement.
"Company Disclosure Schedule" shall have the meaning set forth in Article
IV.
"Company Employee Benefit Plans" shall have the meaning set forth in
Section 4.11(a).
"Company Intellectual Property" shall have the meaning set forth in Section
4.14(a).
"Company Material Adverse Effect" shall mean any effect that is materially
adverse to (i) the ability of the Company to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby or (ii) the
business, assets, liabilities, results of operations or financial condition of
the Company and its Subsidiaries, taken as a whole; provided, however, that in
no event shall any effect that results from (a) this Agreement or any actions
taken in compliance with this Agreement, the transactions contemplated hereby or
the pendency or announcement thereof, (b) changes or conditions generally
affecting the industries in which the Company operates, (c) changes in general
economic, regulatory or political conditions, (d) changes in the trading price
of the Company Common Stock, (e) the Company's failure to meet internal or
industry analyst expectations or (f) stockholder class action litigation arising
from allegations of a breach of fiduciary duty relating to this Agreement,
constitute a Company Material Adverse Effect.
"Company Material Contracts" shall have the meaning set forth in Section
4.15.
"Company Multiemployer Plan" shall have the meaning set forth in Section
4.11(b).
"Company Preferred Stock" shall have the meaning set forth in Section
4.03(a).
"Company Property" shall have the meaning set forth in Section 4.16(b)(i).
"Company SEC Reports" shall have the meaning set forth in Section 4.05(a).
"Company Series 1 Preferred Stock" shall have the meaning set forth in
Section 4.03(a).
"Company Stock Option" shall have the meaning set forth in Section 3.04(a).
"Company Stock Option Plans" shall have the meaning set forth in Section
4.03(a).
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"Company Stockholder Approval" shall mean the adoption by not less than a
majority of all outstanding shares of Company Common Stock of this Agreement at
the Company Stockholder Meeting.
"Company Stockholder Meeting" shall have the meaning set forth in Section
6.04(a).
"Confidentiality Agreements" shall have the meaning set forth in Section
6.03.
"Contract" shall mean any note, bond, mortgage, indenture, other evidence
of indebtedness, guarantee, license, franchise, warranty, contract or other
agreement that is legally binding on the applicable party.
"CSFB" shall have the meaning set forth in Section 4.18.
"D&O Insurance" shall have the meaning set forth in Section 6.10(c).
"DGCL" shall have the meaning set forth in Section 2.01(a).
"Effective Time" shall have the meaning set forth in Section 2.01(a).
"Environmental Claim" shall have the meaning set forth in Section
4.16(b)(iii).
"Environmental Laws" shall have the meaning set forth in Section
4.16(b)(iv).
"ERISA" shall have the meaning set forth in Section 4.11(a).
"ERISA Affiliate" shall have the meaning set forth in Section 4.11(a).
"ESPP" shall have the meaning set forth in Section 3.04(b).
"EUR" shall mean the currency introduced at the start of the third stage of
European economic and monetary union pursuant to the Treaty establishing the
European Communities, as amended by the Treaty on European Union and by the
Treaty of Amsterdam.
"Excess Shares" shall have the meaning set forth in Section 3.03(e)(ii).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Agent" shall have the meaning set forth in Section 3.02.
"Exchange Fund" shall have the meaning set forth in Section 3.03(a).
"Exchange Ratio" shall have the meaning set forth in Section 3.01(c).
"Exon-Florio" shall have the meaning set forth in Section 4.04.
"Expenses" shall have the meaning set forth in Section 3.03(e)(iii).
"GAAP" shall mean generally accepted accounting principles of the United
States of America, as in effect from time to time.
"Governmental Authority" shall mean any governmental or regulatory
authority, court, administrative agency or commission or other governmental
entity, authority or other instrumentality of the United States, any foreign
country (including, for avoidance of doubt, AEX and the Netherlands Merger
Committee) or any domestic or foreign state, county, city or other political
subdivision.
"Hazardous Materials" shall have the meaning set forth in Section
4.16(b)(v).
"HoldCo" shall have the meaning set forth in the preamble hereto.
"HoldCo Common Stock" shall mean HoldCo's common stock, par value $0.01 per
share.
"HoldCo Promissory Notes" shall have the meaning set forth in Section
3.01(e).
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" shall have the meaning set forth in Section 6.10(a).
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"Issuance Obligation" shall have the meaning set forth in Section 4.03(a).
"Law" shall mean any constitution, law, statute, treaty, rule, regulation,
ordinance, binding case law or principle of common law, notice, approval, order
or decree of any Governmental Authority, and any contract with any Governmental
Authority relating to compliance with any of the foregoing.
"Liens" shall have the meaning set forth in Section 4.04.
"Merger" shall have the meaning set forth in the recitals hereto.
"Merger Consideration" shall have the meaning set forth in Section 3.01(c).
"Merger Sub" shall have the meaning set forth in the preamble hereto.
"Merger Sub Common Stock" shall mean Merger Sub's common stock, par value
$0.01 per share.
"NASDAQ" shall have the meaning set forth in Section 3.03(e)(ii).
"Organizational Documents" shall mean the articles of association,
certificate of incorporation, the code of regulations, by-laws, limited
liability company agreement, partnership agreement or other organizational
documents of the Person, each as may be amended and restated from time to time.
"Parent" shall have the meaning set forth in the preamble hereto.
"Parent Companies" shall have the meaning set forth in Article IV.
"Parent Disclosure Schedule" shall have the meaning set forth in Article V.
"Parent Intellectual Property" shall have the meaning set forth in Section
5.12(a).
"Parent Material Adverse Effect" shall mean any effect that is materially
adverse to (i) the ability of Parent to perform its obligations under this
Agreement or to consummate the transactions contemplated hereby or (ii) the
business, assets, liabilities, results of operations or financial condition of
Parent and its Subsidiaries, taken as a whole; provided, however, that in no
event shall any effect that results from (a) this Agreement or any actions taken
in compliance with this Agreement, the transactions contemplated hereby or the
pendency or announcement thereof, (b) changes or conditions generally affecting
the industries in which Parent operates, (c) changes in general economic,
regulatory or political conditions, (d) changes in the trading price of the
Parent Ordinary Shares, (e) Parent's failure to meet internal or industry
analyst expectations or (f) stockholder class action litigation arising from
allegations of a breach of fiduciary duty relating to this Agreement, constitute
a Parent Material Adverse Effect.
"Parent Ordinary Shares" shall mean Parent's ordinary shares with a par
value of EUR 0.02 per share.
"Parent Preferred Shares" shall have the meaning set forth in Section
5.03(a).
"Parent Priority Shares" shall have the meaning set forth in Section
5.03(a).
"Parent SEC Reports" shall have the meaning set forth in Section 5.05(a).
"Parent Stock Option Plans" shall have the meaning set forth in Section
5.03(a).
"Permits" shall have the meaning set forth in Section 4.10(b).
"Person" shall mean and include an individual, a partnership, a joint
venture, a corporation, a trust, an unincorporated organization, a limited
liability company, a group and a government or other department or agency
thereof.
"Preference Share Option" shall have the meaning set forth in Section
5.03(a).
"Proxy Statement" shall have the meaning set forth in Section 4.06.
"Recommendation" shall have the meaning set forth in Section 4.02.
"Registration Statement" shall have the meaning set forth in Section 4.06.
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"Release" shall have the meaning set forth in Section 4.16(b)(vi).
"Returns" shall have the meaning set forth in Section 4.13(a).
"Rights" shall mean the rights to purchase Series A Participating Preferred
Stock of the Company issued pursuant to the Rights Agreement.
"Rights Agreement" shall have the meaning set forth in Section 4.03(a).
"Rule 145/Pooling Affiliates" shall have the meaning set forth in Section
6.13.
"SEC" shall mean the United States Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Shares" shall have the meaning set forth in Section 3.01(c).
"Shares Trust" shall have the meaning set forth in Section 3.03(e)(iii).
"Subsidiary" with respect to a Person shall mean (x) any partnership of
which such Person or any of its Subsidiaries is a general partner or (y) any
other entity in which such Person or any of its Subsidiaries owns or has the
power to vote more than 50% of the equity interests in such entity having
general voting power to participate in the election of the governing body of
such entity.
"Superior Proposal" shall have the meaning set forth in Section 6.05(a).
"Surviving Corporation" shall have the meaning set forth in Section
2.01(a).
"Takeover Proposal" shall have the meaning set forth in Section 6.05(a).
"Taxes" shall have the meaning set forth in Section 4.13(a).
"Termination Fee" shall have the meaning set forth in Section 8.03(a).
"Third-Party Acquisition Event" shall have the meaning set forth in Section
8.03(b).
"Trading Day" shall mean any day on which securities are traded on the
NASDAQ.
"Triggering Event" shall have the meaning set forth in Section 8.01.
"Voting Debt" shall have the meaning set forth in Section 4.03(a).
Section 1.02 Interpretation. Definitions shall apply equally to both the
singular and plural forms of the terms defined. Whenever the context may
require, any pronoun shall include the corresponding masculine, feminine and
neuter forms. All references herein to Articles, Sections, Annexes, Schedules,
Exhibits and parties shall be deemed to be references to Articles and Sections
of, Annexes, Schedules, Exhibits and parties to, this Agreement unless the
context shall otherwise require. The words "include," "includes" and "including"
shall be deemed to be followed by the phrase "without limitation." The words
"hereof," "herein" and "hereunder" and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement. Unless otherwise expressly provided herein, any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
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ARTICLE II
THE MERGER
Section 2.01 The Merger; Closing.
(a) Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law ("DGCL"), Merger Sub shall
be merged with and into the Company at the Effective Time and the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation under the Laws of the State of Delaware (the
"Surviving Corporation"). Subject to the provisions of this Agreement, the
Company and Merger Sub shall file a certificate of merger (the "Certificate of
Merger") in accordance with the relevant provisions of the DGCL and shall make
all other filings required under the DGCL. The Merger shall become effective
upon the filing of the Certificate of Merger (or at such later time reflected in
such Certificate of Merger as shall be agreed to by Parent and the Company). The
date and time when the Merger shall become effective is referred to herein as
the "Effective Time."
(b) The closing of the Merger (the "Closing") shall be held at the offices
of Skadden, Arps, Slate, Meagher & Flom LLP, 4 Times Square, New York, New York
10036, as soon as practicable, but in any event within three (3) Business Days
after the last of the conditions (excluding conditions that, by their nature,
cannot be satisfied until the Closing Date) set forth in Article VII is
satisfied or waived or at such other time and date as the parties shall agree in
writing. Such date is referred to herein as the "Closing Date."
(c) From and after the Effective Time, the Merger shall have the effects
set forth in this Agreement and in Section 259 of the DGCL.
Section 2.02 Certificate of Incorporation and By-Laws of the Surviving
Corporation. At the Effective Time, the Restated Certificate of Incorporation
of the Company, as in effect immediately prior to the Effective Time, shall be
amended and restated as set forth in Exhibit A. The Restated Certificate of
Incorporation of the Company, as so amended and restated at the Effective Time,
shall be the Certificate of Incorporation of the Surviving Corporation until
thereafter amended in accordance with applicable Law. The By-Laws of Merger Sub,
in effect immediately prior to the Effective Time, shall be the By-Laws of the
Surviving Corporation until thereafter amended in accordance with applicable
Law.
Section 2.03 Directors and Officers of the Surviving Corporation. At the
Effective Time, the directors of Merger Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation, until the earlier of
their resignation or removal or until their successors are duly elected or
appointed and qualified. At the Effective Time, the officers of the Company
immediately prior to the Effective Time shall, subject to the applicable
provisions of the Certificate of Incorporation and By-Laws of the Surviving
Corporation, be the officers of the Surviving Corporation until their respective
successors shall be duly elected or appointed and qualified.
Section 2.04 Tax and Accounting Consequences.
(a) It is intended by the parties that the Merger shall constitute a
reorganization within the meaning of Section 368(a) of the Code. The parties
adopt this Agreement as a "plan of reorganization" within the meaning of Section
1.368-2(g) and 1.368-3(a) of the United States Income Tax Regulations.
(b) It is intended by the parties that the Merger shall qualify for
accounting treatment as a pooling-of-interests business combination.
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ARTICLE III
CONVERSION OF SHARES AND RELATED MATTERS
Section 3.01 Conversion of Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holders of Shares,
Parent, the Company, the Surviving Corporation or any of their respective
Subsidiaries:
(a) Cancellation of Treasury Stock and Stock Owned by Parent or any of
its Subsidiaries. All shares of Company Common Stock owned by the Company
as treasury stock and all shares of Company Common Stock owned by any of
the Company's Subsidiaries, Parent or any of its Subsidiaries immediately
prior to the Effective Time shall, by virtue of the Merger, and without any
action on the part of the holder thereof, no longer be outstanding, shall
be canceled and retired without payment of any consideration therefor and
shall cease to exist.
(b) Capital Stock of Merger Sub. Each share of Merger Sub Common
Stock outstanding immediately prior to the Effective Time shall be
converted into and become one share of common stock of the Surviving
Corporation.
(c) Conversion of Shares. Except as provided in clause (a) of this
Section 3.01, each share of Company Common Stock outstanding immediately
prior to the Effective Time (the "Shares") shall be converted into the
right to receive such number of fully paid and nonassessable Parent
Ordinary Shares as is equal to the Exchange Ratio (the "Merger
Consideration"). For purposes of this Agreement, "Exchange Ratio" shall
mean 1.286. At the Effective Time, all Shares shall no longer be
outstanding and shall be canceled and retired and shall cease to exist, and
each certificate (a "Certificate") formerly representing any of such Shares
shall thereafter represent only the right to receive the Merger
Consideration and any cash in lieu of fractional Parent Ordinary Shares and
any dividend or distribution pursuant to Section 3.03(c), in each case,
without interest.
(d) Certain Adjustments. In the event that, subsequent to the date of
this Agreement but prior to the Effective Time, any change in the
outstanding shares of capital stock of the Company or Parent shall occur as
a result of a stock split, stock combination, stock dividend,
recapitalization, redenomination of share capital or other similar
transaction, the Exchange Ratio and other items dependent thereon shall be
appropriately adjusted.
(e) Issuance of Parent Ordinary Shares and HoldCo Promissory
Notes. In consideration for the issuance by Parent of the Parent Ordinary
Shares to be issued in the Merger pursuant to Section 3.01(c), HoldCo shall
issue one or more promissory notes to Parent in the form and amounts to be
mutually agreed upon by Parent and HoldCo (the "HoldCo Promissory Notes").
The amount required to be contributed by HoldCo to pay up the Parent
Ordinary Shares (stortings-plicht) shall be the aggregate nominal value;
any excess contributed shall be accepted by Parent as non-mandatory share
premium (niet-bedongen agio). In consideration for the other steps referred
to in this Section 3.01 (including the issuance of the HoldCo Promissory
Notes by HoldCo), Parent shall deposit with the Exchange Agent, pursuant to
Section 3.02, the Parent Ordinary Shares to be issued in the Merger for the
benefit of the holders of Company Common Stock entitled thereto pursuant to
Section 3.01(c) for the purposes of giving effect to the conversion and
exchange referred to in this Article III.
Section 3.02 Exchange of Shares. Prior to the Effective Time, Parent shall
appoint a bank or trust company reasonably acceptable to the Company as exchange
agent (the "Exchange Agent") for the purposes of exchanging the Certificates for
the Merger Consideration and cash in lieu of fractional Parent Ordinary Shares.
As promptly as practicable, and in any event within five Business Days, after
the Effective Time, Parent shall send, or shall cause to be sent, to each holder
of record of Shares as of the Effective Time, a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in customary form and have such other customary provisions as
the Surviving Corporation or
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Parent may reasonably specify) providing instructions for use in effecting the
surrender of Certificates in exchange for the Merger Consideration and cash in
lieu of fractional Parent Ordinary Shares.
Section 3.03 Exchange of Certificates.
(a) Exchange Agent. At or prior to the Effective Time, Parent shall
deposit, or shall cause to be deposited, with the Exchange Agent (i) for the
benefit of the holders of Shares, the aggregate number of Parent Ordinary Shares
to be issued pursuant to Section 3.01(c) and (ii) an amount of cash sufficient
to permit the Exchange Agent to make the necessary payments of cash in lieu of
fractional Parent Ordinary Shares in accordance with Section 3.03(e) (such cash
and Parent Ordinary Shares, together with any dividends or distributions with
respect thereto being hereinafter referred to as the "Exchange Fund"), to be
held for the benefit of and distributed to the Company's stockholders in
accordance with this Section. The Exchange Agent shall invest any cash included
in the Exchange Fund as directed by the Surviving Corporation on a daily basis
in reasonably prudent investments. Any interest and other income resulting from
such investments shall promptly be paid to the Surviving Corporation.
(b) Exchange Procedures. Upon surrender of a Certificate for cancellation
to the Exchange Agent, together with the letter of transmittal referred to in
Section 3.02 duly executed and completed in accordance with its terms, the
holder of such Certificate shall be entitled to receive in exchange therefor (i)
a certificate or certificates representing the Merger Consideration into which
the Shares represented by such Certificate have been converted in accordance
with Section 3.01(c), (ii) the amount of dividends or other distributions, if
any, with a record date on or after the Effective Time which theretofore became
payable with respect to the Parent Ordinary Shares constituting such Merger
Consideration, and (iii) the cash amount payable in lieu of fractional Parent
Ordinary Shares in accordance with Section 3.03(e), in each case, which such
holder has the right to receive pursuant to the provisions of this Article III,
and the Certificate so surrendered shall forthwith be canceled. In no event
shall the holder of any Certificate be entitled to receive interest on any funds
to be received in the Merger. In the event of a transfer of ownership of Shares
which is not registered in the transfer records of the Company, a certificate or
certificates representing the Merger Consideration into which such Shares have
been converted in accordance with Section 3.01(c), plus the cash amount payable
in lieu of fractional Parent Ordinary Shares in accordance with Section 3.03(e),
may be issued to a transferee if the Certificate representing such Shares is
presented to the Exchange Agent accompanied by all documents required to
evidence and effect such transfer and by evidence that any applicable stock
transfer taxes have been paid by the stockholder. Until surrendered as
contemplated by this Section 3.03(b) and subject to Section 3.03(c), each
Certificate shall, after the Effective Time, represent for all purposes only the
right to receive the Merger Consideration into which the number of Shares shown
thereon has been converted in accordance with Section 3.01(c), plus the cash
amount payable in lieu of fractional Parent Ordinary Shares in accordance with
Section 3.03(e). Notwithstanding the foregoing, certificates representing Shares
surrendered for exchange by any Person constituting a "Rule 145/Pooling
Affiliate" of the Company for purposes of Section 6.13 shall not be exchanged
until Parent has received the letter required by Section 6.13 from such Rule
145/Pooling Affiliate.
(c) Distributions With Respect To Unexchanged Shares. No dividends or
other distributions declared, made or paid after the Effective Time with respect
to Parent Ordinary Shares with a record date on or after the Effective Time
shall be paid to the holder of any unsurrendered Certificate with respect to the
Parent Ordinary Shares represented thereby and no cash payment in lieu of
fractional Parent Ordinary Shares shall be paid to any such holder pursuant to
Section 3.03(e) until the holder of record of such Certificate shall surrender
such Certificate in accordance with this Section. Subject to the effect of
applicable Laws, following surrender of any such Certificate, there shall be
paid to the record holder of the certificates representing Parent Ordinary
Shares, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions, if any, with a record date on or after the
Effective Time which theretofore became payable, but which were not paid by
reason of the immediately preceding sentence, with respect to such Parent
Ordinary Shares and (ii) at the appropriate payment date, the amount of
dividends or other distributions with a record date on or after the Effective
Time but prior to surrender and a payment date subsequent to surrender payable
with respect to such Parent Ordinary Shares.
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Dividends or other distributions with a record date on or after the Effective
Time, but prior to surrender of Certificates by holders thereof payable in
respect of Parent Ordinary Shares held by the Exchange Agent, shall be held in
trust for the benefit of such holders of Certificates.
(d) No Further Ownership Rights In Company Common Stock. All Parent
Ordinary Shares issued and all cash paid upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to Section 3.03(e)) shall be deemed to have been issued at the
Effective Time in full satisfaction of all rights pertaining to the Shares
represented thereby. From and after the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers thereon of the Shares. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Section.
(e) No Fractional Shares.
(i) No certificate or scrip representing fractional Parent Ordinary
Shares shall be issued in the Merger upon the surrender for exchange of
Certificates, no dividend or distribution of Parent will relate to such
fractional Parent Ordinary Shares, and such fractional Parent Ordinary
Shares shall not entitle the owner thereof to vote or to any rights of a
holder of Parent Ordinary Shares.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of whole Parent
Ordinary Shares delivered to the Exchange Agent by Parent pursuant to
Section 3.03(a) over (B) the aggregate number of whole shares of Parent
Ordinary Shares to be distributed to former holders of Shares pursuant to
Section 3.03(b) (such excess being herein called the "Excess Shares").
Following the Effective Time, the Exchange Agent shall, on behalf of the
former holders of Shares, sell the Excess Shares at then-prevailing prices
on the NASDAQ Stock Market's National Market ("NASDAQ"), all in the manner
provided in Section 3.03(e)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NASDAQ in round lots to the extent practicable. The
Exchange Agent shall use reasonable efforts to complete the sale of the
Excess Shares as promptly following the Effective Time as, in the Exchange
Agent's sole judgment, is practicable consistent with obtaining the best
execution of such sales in light of prevailing market conditions. Until the
net proceeds of such sale or sales have been distributed to the holders of
Certificates formerly representing Shares, the Exchange Agent shall hold
such proceeds in trust for such holders (the "Shares Trust"). All
commissions, transfer Taxes and other out-of-pocket transaction costs,
including the expenses and compensation of the Exchange Agent incurred in
connection with such sale of the Excess Shares, shall be paid from the
Shares Trust (the "Expenses"). The Exchange Agent shall determine the
portion of the Shares Trust to which each former holder of Shares is
entitled, if any, by multiplying the amount of the aggregate net proceeds
comprising the Shares Trust (less the aggregate amount of the Expenses) by
a fraction, the numerator of which is the amount of the fractional share
interest to which such former holder of Shares is entitled (after taking
into account all Shares held at the Effective Time by such holder) and the
denominator of which is the aggregate amount of fractional share interests
to which all former holders of Shares are entitled.
(iv) Notwithstanding the provisions of Section 3.03(e)(ii) and (iii),
Parent may elect at its option, exercised prior to the Effective Time, in
lieu of the issuance and sale of Excess Shares and the making of the
payments herein above contemplated, to pay each former holder of Shares an
amount in cash equal to the product obtained by multiplying (A) the average
of the last reported sales prices of Parent Ordinary Shares, as reported on
NASDAQ, on each of the five Trading Days ending on the third Trading Day
immediately preceding the Closing Date by (B) the fractional Parent
Ordinary Share to which such holder would otherwise be entitled.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains undistributed to the Company's stockholders for one (1) year after the
Effective Time shall be delivered to or as directed by Parent, upon demand, and
any holders of Certificates who have not theretofore complied with
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this Article III shall thereafter look only to Parent (subject to abandoned
property, escheat and other similar Laws) as a general creditor for payment of
their claim for the Merger Consideration, any cash in lieu of fractional Parent
Ordinary Shares and any dividends or distributions with respect to Parent
Ordinary Shares. Neither Parent nor the Surviving Corporation shall be liable to
any holder of any Certificate for Parent Ordinary Shares (or dividends or
distributions with respect thereto), or cash payable in respect of fractional
Parent Ordinary Shares, delivered to a public official pursuant to any
applicable abandoned property, escheat or similar Laws. Any securities or cash
amounts remaining unclaimed by holders of Certificates five years after the
Effective Time (or such earlier date immediately prior to such time as such
amounts would otherwise escheat to or become property of any Governmental
Authority) shall, to the extent permitted by applicable Law, become the property
of the Surviving Corporation free and clear of any claims or interest of any
Person previously entitled thereto.
(g) Lost, Stolen or Destroyed Certificates. If any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond in such reasonable
amount as Parent may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall deliver in
exchange for such lost, stolen or destroyed Certificate the Merger Consideration
into which the Shares formerly represented thereby have been converted, any cash
in lieu of fractional Parent Ordinary Shares, and unpaid dividends and
distributions in respect of or on Parent Ordinary Shares deliverable in respect
thereof, pursuant to this Agreement.
(h) Withholding Rights. Each of the Surviving Corporation and Parent shall
be entitled to deduct and withhold from the Parent Ordinary Shares (and any
dividends or distributions thereon) and cash in lieu of fractional Parent
Ordinary Shares otherwise payable hereunder to any holder of Certificates in
respect of the Shares formerly represented thereby such amounts as it is
required to deduct and withhold with respect to the making of such payment under
any applicable provision of federal, state or local income Tax Law. To the
extent that the Surviving Corporation or Parent so withholds those amounts, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of Shares in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case may be.
Section 3.04 Company Stock Options and Stock Rights.
(a) At the Effective Time and subject to the terms and conditions of any of
the agreements or plans set forth in Section 3.04(a) of the Company Disclosure
Schedule and except as set forth in Section 3.04(b), each outstanding option to
purchase shares of Company Common Stock (each, a "Company Stock Option") under
the Company Stock Option Plans, whether or not exercisable, shall be assumed or
substituted in a manner consistent with applicable Laws by Parent. Each Company
Stock Option so assumed or substituted in a manner consistent with the
applicable Laws by Parent under this Agreement shall continue to have, and be
subject to, the same terms and conditions set forth in the applicable Company
Stock Option Plan immediately prior to the Effective Time (including any
repurchase rights), except that (i) each Company Stock Option shall be
exercisable (or shall become exercisable in accordance with its terms) for that
number of whole Parent Ordinary Shares equal to the product of the number of
shares of Company Common Stock that were issuable upon exercise of such Company
Stock Option immediately prior to the Effective Time multiplied by the Exchange
Ratio, rounded down to the nearest whole number of Parent Ordinary Shares and
(ii) the per share exercise price for the Parent Ordinary Shares issuable upon
exercise of such assumed Company Stock Option shall be equal to the quotient
determined by dividing the exercise price per share of Company Common Stock at
which such Company Stock Option was exercisable immediately prior to the
Effective Time by the Exchange Ratio, rounded up to the nearest whole cent.
(b) The Company shall take all actions necessary, including, if
appropriate, amending the terms of the Company's 1996 Employee Stock Purchase
Plan (the "ESPP") (i) to cause the rights of participants in the ESPP with
respect to any offering period underway as of the Effective Time pursuant to the
ESPP to be determined by treating the last Business Day prior to the Effective
Time as the last day of such
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offering period and to prevent any offering period from commencing or occurring
after the termination of such offering period, (ii) to make such other pro-rata
adjustments as may be necessary to reflect the reduced offering period but
otherwise treating such offering period as a fully effective and completed
offering period for all purposes of the ESPP, and (iii) to cause the ESPP and
all rights of participants therein and any other employees of the Company and
all obligations of the Company thereunder (except for ordinary and necessary
administrative obligations) to be terminated at or prior to the Effective Time.
(c) The Company Stock Options assumed or substituted by Parent pursuant to
Section 3.04(a) shall qualify, to the extent permitted by applicable Laws,
following the Effective Time as incentive stock options as defined in Section
422 of the Code to the extent such Company Stock Options qualified as incentive
stock options immediately prior to the Effective Time.
(d) Parent shall reserve a sufficient number of Parent Ordinary Shares for
issuance under this Section 3.04.
(e) Parent agrees to file a registration statement on Form S-8 (or any
successor form) for the Parent Ordinary Shares issuable with respect to assumed
Company Stock Options as promptly as practicable after the Closing Date, but in
no event later than 15 days thereafter, and shall use its best efforts to
maintain such registration statement on Form S-8 (or any successor form),
including the current status of any related prospectus or prospectuses, for so
long as any Company Stock Options remain outstanding.
(f) Parent and the Company shall take all such steps as may be required to
cause the transactions contemplated by this Section 3.04 and any other
dispositions of equity securities of the Company (including derivative
securities) or acquisitions of Parent equity securities (including derivative
securities) in connection with this Agreement by each individual who (i) is a
director or officer of Company or (ii) at the Effective Time, shall become a
director or officer of Parent, to be exempt under Rule 16b-3 promulgated under
the Exchange Act, such steps to be taken in accordance with the No-Action Letter
dated January 12, 1999, issued by the SEC to Skadden, Arps, Slate, Meagher &
Flom LLP.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent, HoldCo and Merger Sub (the
"Parent Companies") as follows except as (i) set forth with respect to a
specifically identified representation and warranty in the disclosure schedule
heretofore delivered to the Parent Companies by the Company (the "Company
Disclosure Schedule"), provided that to the extent such disclosure contains
sufficient information to qualify any other representation and warranty, such
disclosure also shall be deemed to qualify such other representation and
warranty; or (ii) disclosed in the Company SEC Reports filed prior to the date
of this Agreement to the extent that it is reasonably apparent that such
disclosure should qualify a specific representation and warranty.
Section 4.01 Due Organization, Good Standing and Corporate Power. Each of
the Company and its Subsidiaries is a corporation or other entity duly
organized, validly existing and in good standing or its equivalent, if any (with
respect to jurisdictions which recognize the concept of good standing), under
the Laws of the jurisdiction of its organization and has the requisite corporate
or other power and authority to own, lease and operate its properties and to
carry on its business as now being conducted, except where the failure to be so
organized, existing and in good standing or to have such power and authority
could not reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect. The Company and each of its Subsidiaries is
duly qualified or licensed and in good standing or its equivalent, if any (with
respect to jurisdictions which recognize the concept of good standing) to do
business in each jurisdiction in which the property owned, leased or operated by
it or the nature of the business conducted by it makes such qualification
necessary, except in such jurisdictions where the failure to be so qualified or
licensed and in good standing could not reasonably be expected to, individually
or in the aggregate, have a Company Material Adverse Effect. The respective
Organizational Documents of the Company and each of its Subsidiaries do not
contain any provision limiting or otherwise restricting the ability of the
Company to
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control its Subsidiaries. Section 4.01 of the Company Disclosure Schedule sets
forth a list of all Subsidiaries of the Company, including, for each Subsidiary
of the Company, the jurisdiction of incorporation or organization,
capitalization, the number of issued and outstanding shares of capital stock (or
other equity) and the owner(s) of all such issued and outstanding shares of
capital stock (or other equity).
Section 4.02 Authorization and Validity of Agreement. The Board of
Directors of the Company has, on or prior to the date of this Agreement, (a)
declared the Merger advisable and in the best interest of the Company and its
stockholders and approved this Agreement in accordance with applicable Law, (b)
resolved to recommend the adoption of this Agreement by the Company's
stockholders (the "Recommendation") and (c) directed that this Agreement be
submitted to the Company's stockholders for adoption. The Company has full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and, subject, with respect to the Merger, to obtaining
the Company Stockholder Approval, to consummate the transactions contemplated
hereby. The execution, delivery and performance of this Agreement by the
Company, and the consummation by it of the transactions contemplated hereby,
have been duly authorized and unanimously approved by the Board of Directors of
the Company and no other corporate action on the part of the Company is
necessary to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby, other than, with
respect to the Merger, the Company Stockholder Approval. This Agreement has been
duly executed and delivered by the Company and each constitutes a valid and
binding obligation of the Company enforceable against the Company in accordance
with its terms, except that (a) such enforcement may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
Laws, now or hereafter in effect, relating to or limiting creditors' rights
generally and (b) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 4.03 Capitalization.
(a) The authorized capital stock of the Company consists of 100,000,000
shares of Company Common Stock and 1,000,000 shares of preferred stock, par
value $.01 per share (the "Company Preferred Stock"), of which 15,000 shares
have been designated as Series 1 Convertible Preferred Stock (the "Company
Series 1 Preferred Stock") and 50,000 shares were designated as Series A
Participating Preferred Stock. At the close of business on August 31, 2000: (i)
34,077,272 shares of Company Common Stock were issued and outstanding, (ii)
options to purchase 5,229,462 shares of Company Common Stock were outstanding
under the Company's stock option and stock benefit plans and arrangements
("Company Stock Option Plans"), (iii) no shares of Company Preferred Stock were
issued and outstanding, except for 15,000 shares of Company Series 1 Preferred
Stock, and (iv) 0 shares of Company Common Stock were held by the Company in its
treasury. Since August 31, 2000, the Company has not issued any shares of
capital stock of the Company other than upon exercise of options granted prior
to August 31, 2000 under the Company Stock Option Plans or pursuant to the ESPP,
and has not granted any stock options other than in the ordinary course of
business to new employees of the Company. As of the date hereof, the aggregate
number of Company Common Stock issuable upon conversion of the issued and
outstanding shares of Company Series 1 Preferred Stock is 1,111,111. All issued
and outstanding shares of capital stock of the Company have been duly authorized
and validly issued and are fully paid and nonassessable. Except for the rights
("Rights") issued pursuant to the Rights Agreement, dated as of September 25,
1996, between the Company and ChaseMellon Shareholder Services, L.L.C., as
rights agent, as amended (the "Rights Agreement"), the options granted under the
Company Stock Option Plans and the Series 1 Preferred Shares, there are no
outstanding or authorized options, warrants, rights, subscriptions, claims of
any character, agreements, obligations, convertible or exchangeable securities,
or other commitments, contingent or otherwise, relating to shares of capital
stock or other equity interests of the Company or any of its Subsidiaries,
pursuant to which the Company or any of its Subsidiaries is or may become
obligated to issue shares of its capital stock or other equity interests or any
securities convertible into, exchangeable for, or evidencing the right to
subscribe for, any shares of the capital stock or other equity interests of the
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Company or any of its Subsidiaries (each, an "Issuance Obligation"). There are
no outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any outstanding securities of the Company. The Company has no authorized
or outstanding bonds, debentures, notes or other indebtedness the holders of
which have the right to vote (or convertible or exchangeable into or exercisable
for securities the holders of which have the right to vote) with the Company's
stockholders on any matter ("Voting Debt"). There are no restrictions of any
kind which prevent or restrict the payment of dividends by the Company or any of
its Subsidiaries and there are no limitations or restrictions on the right to
vote, sell or otherwise dispose of such capital stock or other ownership
interests.
(b) All of the issued and outstanding shares of capital stock of each
Subsidiary of the Company are validly issued, fully paid and nonassessable. No
Subsidiary of the Company has outstanding Voting Debt and no Subsidiary of the
Company is bound by, obligated under, or party to an Issuance Obligation with
respect to any security of the Company or any security of any Subsidiary of the
Company and there are no obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any outstanding securities of any of
the Company's Subsidiaries or any capital stock of, or other ownership interests
in, any of the Company's Subsidiaries.
(c) Except for the Company's interest in its Subsidiaries, the Company does
not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for any equity or
similar interest in, any corporation, partnership, joint venture, limited
liability company or other business association or entity.
Section 4.04 Consents and Approvals; No Violations. The execution and
delivery by the Company of this Agreement does not, and the consummation by the
Company of the transactions contemplated hereby will not, result in any
violation of, default or event of default (with or without notice or lapse of
time or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to the loss of a material benefit under, or
result in the creation of any security interest, lien, claim, pledge, option,
right of first refusal, agreement, charge or other encumbrance of any nature or
any other limitation or restriction (collectively, "Liens") upon any of the
properties or assets of the Company or any of its Subsidiaries under: (a)
assuming, in the case of the Merger, that the Company Stockholder Approval is
obtained, any provision of the Organizational Documents of the Company or any of
its Subsidiaries, (b) any Company Employee Benefit Plan, (c) any Contract
applicable to the Company or any of its Subsidiaries or any of their respective
properties or assets or (d) assuming that the filings, registrations,
authorizations, consents and approvals described in clauses (i), (ii), (iii),
(iv) and (v) of this Section 4.04 are made or obtained, any Law applicable to
the Company or any of its Subsidiaries or any of their respective properties or
assets, other than, in the case of clauses (b), (c) and (d), any such Liens,
violations, defaults or rights that could not reasonably be expected to,
individually or in the aggregate, have a Company Material Adverse Effect. No
filing or registration with, or authorization, consent or approval of, any
Governmental Authority is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company, or the consummation of the transactions contemplated hereby,
except: (i) prior notification, authorization and reporting requirements of
other applicable Antitrust Laws, (ii) in compliance with the provisions of the
Exchange Act, (iii) for the filing of the Certificate of Merger with the office
of the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other countries or states in which the Company
or any of its Subsidiaries is qualified to do business, (iv) the Company
Stockholder Approval of the Merger, (v) the filing with the United States
Committee on Foreign Investments pursuant to the Exon-Florio Amendment to the
Defense Protection Act of 1988 ("Exon-Florio") and (vi) for such other consents,
orders, authorizations, registrations, declarations and filings the failure of
which to obtain or make could not reasonably be expected to, individually or in
the aggregate, have a Company Material Adverse Effect. Neither the Company nor
any of its Subsidiaries is in violation of (i) its Organizational Documents or
(ii) any applicable Law, except, in the case of clause (ii), for any violations
that could not reasonably be expected to, individually or in the aggregate, have
a Company Material Adverse Effect. There is no existing default, event of
default or event that, but for the giving of notice or lapse of time or
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both, would constitute a default or event of default under any Contract which
could reasonably be expected to, individually or in the aggregate, have a
Company Material Adverse Effect.
Section 4.05 Company Reports and Financial Statements.
(a) Since September 30, 1998, the Company and, to the extent applicable,
its Subsidiaries have filed all forms, reports and documents with the SEC
required to be filed by it pursuant to the federal securities Laws and the SEC
rules and regulations thereunder, and all forms, reports, schedules,
registration statements and other documents filed with the SEC by the Company
(the "Company SEC Reports") and, to the extent applicable, its Subsidiaries have
complied in all material respects with all applicable requirements of the
federal securities Laws and the SEC rules and regulations promulgated
thereunder, as of the date of such filing, or, if amended prior to the date of
this Agreement, as of the date of the last such amendment. As of their
respective dates, the Company SEC Reports did not contain any untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. The audited
consolidated financial statements and the unaudited consolidated interim
financial statements of the Company included in the Company SEC Reports were
prepared in accordance with GAAP applied on a consistent basis (except as may be
indicated therein or in the notes or schedules thereto) and present fairly, in
all material respects, the consolidated financial position of the Company and
its consolidated Subsidiaries as of the dates thereof and their consolidated
results of operations, stockholders' equity, comprehensive income (loss) and
cash flows for the periods then ended, except that the unaudited consolidated
interim financial statements were or are subject to normal and recurring
adjustments which were not or are not expected to be material to the Company.
(b) Neither the Company nor any of its Subsidiaries has any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise),
in each case, that is required by GAAP to be set forth on a consolidated balance
sheet of the Company or related financial statement footnotes, except for (i)
liabilities and obligations under this Agreement or incurred in connection with
the transactions contemplated hereby and (ii) liabilities and obligations
incurred in the ordinary course of business consistent with past practice since
June 30, 2000 which could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect.
Section 4.06 Information to Be Supplied. None of the information supplied
or to be supplied by the Company for inclusion in (i) the Registration Statement
on Form F-4 to be filed with the SEC under the Securities Act for the purpose of
registering the Parent Ordinary Shares to be issued in connection with the
Merger (the "Registration Statement") or (ii) the proxy statement/prospectus to
be distributed in connection with the Company Stockholder Meeting (the "Proxy
Statement") will, in the case of the Registration Statement, at the time it
becomes effective or, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the initial mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of the
Company Stockholder Meeting, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Registration Statement, as of its effective
date, will comply (with respect to information relating to the Company) as to
form in all material respects with the requirements of the Securities Act, and
as of the date of its initial mailing and as of the date of the Company
Stockholder Meeting, the Proxy Statement will comply (with respect to
information relating to the Company) as to form in all material respects with
the applicable requirements of the Exchange Act. Notwithstanding the foregoing,
the Company makes no representation with respect to any statement in the
foregoing documents based upon information supplied by the Parent Companies for
inclusion therein.
Section 4.07 Absence of Certain Changes. Since June 30, 2000, (a) the
businesses of the Company and its Subsidiaries have been conducted in the
ordinary course consistent with past practice (other than with respect to the
transactions contemplated by this Agreement), (b) there has not been any event,
occurrence, development or state of circumstances or facts that has had, or
could reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect and (c) neither the
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Company nor any of its Subsidiaries has taken any action or omitted to take any
action, which act or omission, if taken after the date of this Agreement, would
result in a breach or violation of Section 6.01.
Section 4.08 Litigation. There is no investigation, action, suit or
proceeding pending against the Company or its Subsidiaries or, to the knowledge
of the Company, threatened against the Company or its Subsidiaries, at law or in
equity, or before or by any Governmental Authority which could reasonably be
expected to have a Company Material Adverse Effect. Neither the Company nor any
of its Subsidiaries is subject to any judgment, order or decree entered in any
lawsuit or proceeding which could reasonably be expected to, individually or in
the aggregate, have a Company Material Adverse Effect.
Section 4.09 Title to Properties; Encumbrances. Each of the Company and
its Subsidiaries has good, valid and marketable title to, or, in the case of
leased properties and assets, valid leasehold interests in, all of its tangible
properties and assets, except where the failure to have such good, valid and
marketable title could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect; in each case, subject to no
Liens, except for (a) Liens reflected in the consolidated balance sheet as of
June 30, 2000, (b) Liens consisting of zoning or planning restrictions,
easements, Permits and other restrictions or limitations on the use of real
property or irregularities in title thereto or any monetary Liens thereon which
do not materially detract from the value of, or impair the use of, such property
by the Company or any of its Subsidiaries in the operation of its respective
business, (c) Liens for current Taxes, assessments or governmental charges or
levies on property not yet due or which are being contested in good faith and
(d) Liens which could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect. Except as could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect, the Company and each of its Subsidiaries are in
compliance with the terms of all leases of tangible properties to which they are
a party and under which they are in occupancy, and all such leases are in full
force and effect.
Section 4.10 Compliance with Laws.
(a) The businesses of the Company and its Subsidiaries are not being
conducted in violation of any applicable Law, except for violations which could
not reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect.
(b) The Company and its Subsidiaries hold, to the extent legally required,
all permits, approvals, licenses, authorizations, certificates, rights,
exemptions and orders from Governmental Authorities (the "Permits") that are
required for the operation of the respective businesses of the Company and/or
its Subsidiaries as now conducted, except where the failure to hold any such
Permit could not reasonably be expected to, individually or in the aggregate,
have a Company Material Adverse Effect, and there has not occurred any default
under any such Permit, except to the extent that such default could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 4.11 Company Employee Benefit Plans.
(a) Section 4.11(a) of the Company Disclosure Schedule contains a true and
complete list of each deferred compensation and each bonus or other incentive
compensation, stock purchase, stock option and other equity compensation or
ownership plan, program, agreement or arrangement; each severance or termination
pay, medical, surgical, hospitalization, life insurance and other "welfare"
plan, fund or program (other than a statutorily mandated non-U.S. based benefit
program) (within the meaning of Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or
other "pension" plan, fund or program (other than a statutorily mandated
non-U.S. based benefit program) (within the meaning of Section 3(2) of ERISA);
each employment, retention, consulting, termination or severance agreement; and
each other material employee benefit plan, fund, program, agreement or
arrangement, in each case, that is sponsored, maintained or contributed to or
required to be contributed to by the Company or by any trade or business,
whether or not incorporated (an "ERISA Affiliate"), that, together with the
Company would be deemed a "single employer" within the meaning of Section
4001(b) of ERISA, or to which the Company or an ERISA Affiliate is party,
whether written or oral, for the benefit of any employee or director or former
employee or director (or any of their
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respective beneficiaries), of the Company or any Company Subsidiary (the
"Company Employee Benefit Plans").
(b) (i) Each Company Employee Benefit Plan is in compliance in all material
respects with all applicable Laws (including ERISA and the Code) and has been
administered and operated materially in accordance with its terms; (ii) each
Company Employee Benefit Plan which is intended to be "qualified" within the
meaning of Section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service to such effect or has a remaining
period of time to apply for such a letter and, to the best knowledge of the
Company, no material event has occurred and no condition exists which could
reasonably be expected to result in the revocation of any such determination;
(iii) no liability under Title IV or Section 302 of ERISA has been incurred by
the Company or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guaranty Corporation (which premiums have been paid when
due); (iv) no Company Employee Benefit Plan has, to the knowledge of the
Company, engaged in a "prohibited transaction" (as defined in Section 4975 of
the Code or Section 406 of ERISA) which is not otherwise an exempt prohibited
transaction; (v) the actuarial present value of the accumulated plan benefits
(whether or not vested) under each Company Employee Benefit Plan covered by
Title IV of ERISA, or which otherwise is a pension plan (as defined in Section
3(2) of ERISA) or provides for actuarially-determined benefits (other than any
Company Employee Benefit Plan which is a "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) (a "Company Multiemployer Plan")), as of the close
of its most recent plan year did not exceed the market value of the assets
allocable thereto; (vi) no Company Employee Benefit Plan covered by Title IV of
ERISA has been terminated and no proceedings have been instituted to terminate
or appoint a trustee under Title IV of ERISA to administer any such plan; (vii)
no Company Employee Benefit Plan (other than any Company Multiemployer Plan)
subject to Section 412 of the Code or Section 302 of ERISA has incurred any
accumulated funding deficiency within the meaning of Section 412 of the Code or
Section 302 of ERISA, or obtained a waiver of any minimum funding standard or an
extension of any amortization period under Section 412 of the Code or Section
303 or 304 of ERISA; (viii) as of the date of this Agreement, neither the
Company nor any of its Affiliates has incurred any unsatisfied withdrawal
liability under Part 1 of Subtitle E of Title IV of ERISA with respect to any
Company Multiemployer Plan, and the aggregate liabilities of the Company and its
Affiliates to all Company Multiemployer Plans in the event of a complete
withdrawal therefrom, as of the close of the most recent fiscal year of each
Company Multiemployer Plan ended prior to the date hereof, could not reasonably
be expected to have a Company Material Adverse Effect; (ix) the execution of
this Agreement and the consummation of the transactions contemplated hereby do
not constitute a triggering event under any Company Employee Benefit Plan,
policy, arrangement, statement, commitment or agreement, which (either alone or
upon the occurrence of any additional or subsequent event) will result in any
"excess parachute payment," as such term is defined in Section 280G of the Code,
or will result in any severance, bonus, retirement, job security or similar-type
benefit, or increase any benefits or accelerate the payment or vesting of any
benefits to any employee or former employee or director of the Company or its
Affiliates, or require the immediate funding or financing of any compensation or
benefits; (x) no liability, claim, action, litigation, audit (other than the
pending audit by the Department of Labor on the Company's 401(k) plan),
examination, investigation or administrative proceeding has been made, commenced
or, to the best knowledge of the Company, threatened with respect to any Company
Employee Benefit Plan (other than routine claims for benefits payable in the
ordinary course) which could reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect; (xi) except as required to
maintain the tax-qualified status of any Company Employee Benefit Plan intended
to qualify under Section 401(a) of the Code, no condition or circumstance exists
that would prevent the amendment or termination of any Company Employee Benefit
Plan; and (xii) there has been no amendment to, written interpretation or
announcement (whether or not written) relating to, or change in employee
participation or coverage under, any Company Employee Benefit Plan which would
increase materially the expense of maintaining such Company Employee Benefit
Plan above the level of such expense incurred for the most recently ended fiscal
year.
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(c) The Company has delivered or made available to Parent true and complete
copies of each Company Employee Benefit Plan and any related trust agreement,
and, to the extent applicable with respect thereto, (i) the current summary plan
description; (ii) the most recent annual report on Internal Revenue Service Form
5500, including any attachments thereto; (iii) the most recent financial report;
(iv) the most recent actuarial valuation report; and (v) the most recent
determination letter received from the Internal Revenue Service.
Section 4.12 Employment Relations and Agreement. Except as could not
reasonably be expected to, individually or in the aggregate, have a Company
Material Adverse Effect, (i) each of the Company and its Subsidiaries is, and at
all times has been, in compliance with all federal, state or other applicable
Laws respecting employment and employment practices, terms and conditions of
employment and wages and hours, and has not and is not engaged in any unfair
labor practice; (ii) no unfair labor practice complaint against the Company or
any of its Subsidiaries is pending before the National Labor Relations Board;
(iii) during the last three years there has not been any labor strike, dispute,
slowdown or stoppage or, to the Company's knowledge, threatened against or
involving the Company or any of its Subsidiaries; (iv) no representation
question exists respecting the employees of the Company or any of its
Subsidiaries; (v) no arbitration proceeding arising out of or under any
collective bargaining agreement is pending and no claim therefor has been
asserted; and (vi) no collective bargaining agreement has existed, exists or is
currently being negotiated by the Company or any of its Subsidiaries.
Section 4.13 Taxes.
(a) Each of the Company and its Subsidiaries has timely filed or caused to
be timely filed with the appropriate Taxing authorities all income and all other
material returns, statements, forms and reports for Taxes (as hereinafter
defined) ("Returns") that are required by Governmental Authorities to be filed
by, or with respect to, the Company and its Subsidiaries on or prior to the
Closing Date. The Returns as filed were correct and complete in all material
respects. "Taxes" shall mean all taxes, charges, duties, fees, levies or other
like governmental and public charges and assessments, including all Federal, and
all material state, local, foreign and other income, franchise, profits, capital
gains, capital stock, value added, transfer, sales, use, occupation, property,
excise, severance, windfall profits, stamp, license, payroll, premiums, social
security withholding and other taxes or other like assessments, charges, duties,
fees, levies or other governmental charges of any kind whatsoever (whether
payable directly or by withholding and whether or not requiring the filing of a
Return), and all estimated taxes, deficiency assessments, additions to tax,
penalties and interest and shall include any liability for such amounts as a
result either of being a member of a combined, consolidated, unitary or
affiliated group or of a contractual obligation to indemnify any person or other
entity.
(b) All material Taxes and Tax liabilities of the Company and its
Subsidiaries that have become due and/or payable have been timely paid or fully
provided for as a liability on the financial statements of the Company and its
Subsidiaries in accordance with GAAP.
(c) Neither the Company nor any of its Subsidiaries has been since
September 30, 1997 or is the subject of an audit, other examination, matter in
controversy, proposed adjustment, refund litigation or other proceeding with
respect to Taxes by the Tax authorities of any nation, state or locality which
could reasonably be expected to result in a material Tax liability, nor has the
Company or any of its Subsidiaries received any notices from any Tax authority
relating to any issue which could reasonably be expected to result in a material
Tax liability.
(d) No deficiencies for any Taxes have been proposed, asserted or assessed
against the Company or any of its Subsidiaries that have not been paid or
adequately reserved for in accordance with GAAP.
(e) There are no liens for Taxes upon the assets or properties of the
Company or any of its Subsidiaries except for statutory liens for current Taxes
not yet due.
(f) No power of attorney has been granted by or with respect to the Company
or any of its Subsidiaries with respect to any matter relating to Taxes.
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(g) Neither the Company nor any of its Subsidiaries has been included in
any "consolidated," "unitary" or "combined" Return (other than Returns which
include only the Company and any of its Subsidiaries) provided for under the
Laws of the United States, any foreign jurisdiction or any state or locality
with respect to material Taxes.
(h) All material Taxes which the Company or any of its Subsidiaries is (or
was) required by Law to withhold or collect have been duly withheld or
collected, and have been timely paid over to the proper authorities to the
extent due and/or payable.
(i) There are no Tax sharing, allocation, indemnification or similar
agreements (in writing) in effect as between the Company, any of its
Subsidiaries, or any predecessor or Affiliate of any of them and any other party
under which the Company (or any of its Subsidiaries) could be liable for any
material Taxes of any party other than the Company or any of its Subsidiaries.
(j) Neither the Company nor any of its Subsidiaries has, as of the Closing
Date, entered into an agreement or waiver extending any statute of limitations
relating to the payment or collection of United States Federal income Taxes of
the Company or any of its Subsidiaries.
(k) No election under Section 341(f) of the Code has been made or shall be
made prior to the Closing Date to treat the Company or any of its Subsidiaries
as a consenting corporation, as defined in Section 341 of the Code.
Section 4.14 Intellectual Property.
(a) Except as could not reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect:
(i) To the knowledge of the Company, the Company or one of its
Subsidiaries owns, or possesses a valid license to use, the rights to all
patents, trademarks, trade names, service marks, copyrights together with
any registrations and applications therefor, Internet domain names, net
lists, schematics, inventories, technology, trade secrets, source codes,
know-how, computer software programs or applications, including all object
and source codes and tangible or intangible proprietary information or
material that are used in the business of the Company and any of its
Subsidiaries as currently conducted (the "Company Intellectual Property").
To the knowledge of the Company, neither the Company nor any of its
Subsidiaries is, or as a result of the execution, delivery or performance
of the Company's obligations hereunder will be, in violation of, or lose
any rights pursuant to, any Company Intellectual Property.
(ii) No claims with respect to the Company Intellectual Property have
been asserted in writing or, to the knowledge of the Company, are
threatened by any Person nor does the Company or any of its Subsidiaries
know of any valid grounds for any bona fide claims against the use by the
Company or any of its Subsidiaries of any Company Intellectual Property, or
challenging the ownership, validity, enforceability or effectiveness of any
of the Company Intellectual Property. All granted and issued patents and
all registered trademarks and service marks and all copyrights held by the
Company or any of its Subsidiaries are valid, enforceable and subsisting.
To the Company's knowledge, there has not been and there is not any
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property by any third Person, including any employee or former
employee.
(iii) No owned Company Intellectual Property is subject to any
outstanding order, judgment, decree, stipulation or settlement agreement
restricting in any manner the licensing or use thereof by the Company or
any of its Subsidiaries.
(b) Neither the Company nor any of its Subsidiaries has granted any Person
an exclusive license to any Company Intellectual Property.
Section 4.15 Material Contracts. Neither the Company nor any of its
Subsidiaries is a party to or bound by any "material contract" (as such term is
defined in Item 601(b)(10) of Regulation S-K of the SEC) (all contracts of the
type described in this Section 4.15 being referred to herein as "Company
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Material Contracts"). Each Company Material Contract is valid and binding on the
Company and is in full force and effect, and the Company and each of its
Subsidiaries have performed in all material respects all obligations required to
be performed by them to date under each Company Material Contract. Neither the
Company nor any of its Subsidiaries knows of, or has received notice of, nor
does there exist, any violation, default or event of default under any Company
Material Contract, except for such violations or defaults as could not
reasonably be expected to, in the aggregate, have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries or Affiliates is a party
to or bound by any non-competition agreement or any other agreement or
obligation which purports to limit the manner in which, or the localities in
which, the Company or any such Subsidiary or Affiliate is entitled to conduct
all or any material portion of the business of the Company and its Subsidiaries,
taken as a whole. The Company has provided Parent with a copy of all material
Contracts between the Company and any of its Subsidiaries, on the one hand, and
Intel Corporation and any of its Subsidiaries, on the other hand.
Section 4.16 Environmental Matters.
(a) Representations and Warranties.
(i) Except as specifically disclosed in the reports from the Phase I
environmental review conducted by the Parent, the Company and its
Subsidiaries are in compliance with all applicable Environmental Laws,
except where failure to be in compliance could not reasonably be expected
to, individually or in the aggregate, have a Company Material Adverse
Effect. The Company and its Subsidiaries have not received any written
communication, whether from a Governmental Authority, citizens group,
employee or otherwise, alleging that the Company or its Subsidiaries are
not in such compliance, and there are no past or present actions,
activities, circumstances, conditions, events or incidents that may prevent
or interfere with such compliance in the future. The Company will provide a
list of all material Permits and other material authorizations of
Governmental Authorities currently held by the Company or its Subsidiaries
pursuant to applicable Environmental Laws within ten (10) days of the date
of this Agreement.
(ii) Except as specifically disclosed in the reports from the Phase I
environmental review conducted by the Parent, there is no Environmental
Claim pending or threatened against the Company or its Subsidiaries or, to
the best knowledge of the Company, against any person or entity whose
liability for any Environmental Claim the Company or its Subsidiaries have
or may have retained or assumed either contractually or by operation of
law.
(iii) Except as specifically disclosed in the reports from the Phase I
environmental review conducted by the Parent, there are no past or present
actions, activities, circumstances, conditions, events or incidents,
including the Release or presence of any Hazardous Material which could
form the basis of any Environmental Claim against the Company or its
Subsidiaries, or to the best knowledge of the Company, against any person
or entity whose liability for any Environmental Claim the Company or its
Subsidiaries have retained or assumed either contractually or by operation
of law which could reasonably be expected to, individually or in the
aggregate, have a Company Material Adverse Effect.
(iv) Except as specifically disclosed in the reports from the Phase I
environmental review conducted by the Parent, there is no Cleanup of
Hazardous Materials being conducted or planned at any property currently or
formerly owned or operated by the Company or its Subsidiaries.
(v) The Company has delivered or otherwise made available for
inspection to the Parent all Phase I and Phase II studies and all material
analyses or tests possessed by the Company or its Subsidiaries pertaining
to Hazardous Materials in, on, beneath or adjacent to any Company Property,
or regarding the Company's and its Subsidiaries' compliance with applicable
Environmental Laws.
(vi) The Company Property does not contain any underground storage
tanks or, to the knowledge of the Company, any: (1) exposed friable
asbestos; (2) equipment using PCBs; (3) underground injection wells; or (4)
septic tanks in which process wastewater or any Hazardous Substances have
been disposed.
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(b) Definitions.
(i) "Cleanup" means all actions required to: (1) cleanup, remove,
treat or remediate Hazardous Materials in the indoor or outdoor
environment; (2) prevent the Release of Hazardous Materials so that they do
not migrate, endanger or threaten to endanger public health or welfare or
the indoor or outdoor environment; (3) perform pre-remedial studies and
investigations or post-remedial monitoring and care; or (4) respond to any
government requests for information or documents in any way relating to
cleanup, removal, treatment or remediation or potential cleanup, removal,
treatment or remediation of Hazardous Materials in the indoor or outdoor
environment.
(ii) "Company Property" means any real property and improvements
currently or formerly owned, leased or operated by the Company or any of
its Subsidiaries.
(iii) "Environmental Claim" means any written claim, action, cause of
action, investigation or notice by any person or entity alleging potential
liability of the Company or its Subsidiaries (including potential liability
for investigatory costs, Cleanup costs, governmental response costs,
natural resource damages, property damages, personal injuries, or
penalties) arising out of, based on or resulting from (1) the presence, or
Release of any Hazardous Materials at any location, whether or not owned or
operated by the Company or its Subsidiaries or (2) circumstances forming
the basis of any violation, or alleged violation, of any Environmental Laws
of the Company or its Subsidiaries.
(iv) "Environmental Laws" means all Laws relating to pollution or
protection of human health or the environment, including, without
limitation, Laws relating to Releases or threatened Releases of Hazardous
Materials or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, Release, disposal, transport or
handling of Hazardous Materials and all Laws with regard to recordkeeping,
notification, disclosure and reporting requirements respecting Hazardous
Materials.
(v) "Hazardous Materials" means all substances defined as Hazardous
Substances, Oils, Pollutants or Contaminants in the National Oil and
Hazardous Substances Pollution Contingency Plan, 40 C.F.R. sec. 300.5, or
defined as such by, or regulated as such under, any Environmental Law.
(vi) "Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration
into the indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater and surface or subsurface strata)
or into or out of any property, including the movement of Hazardous
Materials through or in the air, soil, surface water, groundwater or
property.
Section 4.17 State Takeover Statutes. The Board of Directors of the
Company has approved this Agreement and the transactions contemplated hereby and
such approval is sufficient to render inapplicable to the Merger, this Agreement
and the other transactions contemplated hereby the provisions of Section 203 of
the DGCL. To the knowledge of the Company, except for Section 203 of the DGCL
(which has been rendered inapplicable), no other anti-takeover Law or
anti-takeover provision in the Company's or any of its Subsidiaries'
Organizational Documents is applicable to this Agreement or the transactions
contemplated hereby.
Section 4.18 Broker's or Finder's Fee. Except for the fees of Credit
Suisse First Boston Corporation ("CSFB") (a true and correct copy of the
engagement letter with respect thereto has been previously delivered to Parent
by the Company), no agent, broker, Person or firm acting on behalf of the
Company is, or shall be, entitled to any fee, commission or broker's or finder's
fees from any of the parties, or from any Person controlling, controlled by, or
under common control with any of the parties, in connection with this Agreement
or any of the transactions contemplated hereby.
Section 4.19 Voting Requirements; Board Approval.
(a) To the extent required by the relevant provisions of the DGCL, the
affirmative vote of the holders of at least a majority of the outstanding shares
of the Company Common Stock is the only vote of the holders of any class or
series of the Company's capital stock necessary to adopt this Agreement, and to
approve the Merger and the transactions contemplated hereby.
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(b) The Board of Directors of the Company has, as of the date of this
Agreement, (i) determined that the Merger is advisable and fair to, and in the
best interests of, the Company and its stockholders, (ii) approved this
Agreement and the transactions contemplated hereby and (iii) resolved to
recommend that the stockholders of the Company approve and adopt this Agreement
and the Merger.
Section 4.20 The Company Rights Agreement. The Company, including its
Board of Directors, has irrevocably taken all actions necessary to (i) render
the Rights Agreement inapplicable to the Merger and the other transactions
contemplated by this Agreement, and (ii) ensure that (x) neither Parent nor any
Affiliate or Subsidiary thereof is an Acquiring Person (as defined in the Rights
Agreement) pursuant to the Rights Agreement as a result of the execution of this
Agreement or the consummation of the transactions contemplated by this
Agreement, (y) a Distribution Date, a Triggering Event, a Section 13 Event or a
Share Acquisition Date (as such terms are defined in the Rights Agreement) does
not occur by reason of the approval, execution or delivery of this Agreement or
the consummation of the Merger or any other transaction contemplated by this
Agreement and (z) the Rights Agreement is terminated immediately prior to the
Effective Time.
Section 4.21 Opinion of Financial Advisor. The Company has received the
opinion of CSFB to the effect that, as of the date of this Agreement, the
Exchange Ratio is fair to the holders of Shares from a financial point of view,
and a copy of such opinion has been, or promptly upon receipt thereof will be,
delivered to Parent.
Section 4.22 Pooling-of-Interests; Reorganization. To the knowledge of the
Company, neither the Company nor any of its directors, officers, Affiliates,
Subsidiaries, employees, agents, representatives or stockholders has taken any
action or failed to take any action which would jeopardize (i) the treatment of
the Merger as a pooling-of-interests business combination for accounting
purposes or (ii) the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES
The Parent Companies represent and warrant to the Company as follows except
as (i) set forth with respect to a specifically identified representation and
warranty in the disclosure schedule heretofore delivered to the Company by the
Parent Companies (the "Parent Disclosure Schedule"), provided that to the extent
such disclosure contains sufficient information to qualify any other
representation and warranty, such disclosure shall also be deemed to qualify
such other representation and warranty; or (ii) disclosed in the Parent SEC
Reports filed prior to the date of this Agreement to the extent that it is
reasonably apparent that such disclosure should qualify a specific
representation and warranty:
Section 5.01 Due Organization, Good Standing and Corporate Power.
(a) Each of the Parent Companies is a corporation duly organized, validly
existing and in good standing or its equivalent, if any (with respect to
jurisdictions which recognize the concept of good standing), under the Laws of
the jurisdiction of its organization and has the requisite corporate power and
authority to own, lease and operate its assets and to carry on its business as
now being conducted, except where the failure to be so organized, existing and
in good standing or to have such power and authority could not reasonably be
expected to, individually or in the aggregate, have a Parent Material Adverse
Effect.
(b) Each of HoldCo and Merger Sub was formed solely for the purpose of
engaging in the transactions contemplated by this Agreement and has undertaken
no business or activities other than in connection with establishment of HoldCo
and Merger Sub, entering into this Agreement and consummating the transactions
contemplated hereby, including, with respect to HoldCo, the agreement to issue
the HoldCo Promissory Notes. HoldCo has no Subsidiaries other than Merger Sub.
Merger Sub has no Subsidiaries.
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Section 5.02 Authorization and Validity of Agreement. Each of the Parent
Companies has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of the Parent Companies, and the consummation of the
transactions contemplated hereby, have been duly authorized and unanimously
approved by the Supervisory Board, the Board of Management and the Priority
Shareholder (Stichting Prioriteitsaandelen ASM Lithography Holding N.V.) of
Parent, by the Boards of Directors of HoldCo and Merger Sub and by HoldCo as the
sole stockholder of Merger Sub, and no other corporate action on the part of the
Parent Companies is necessary to authorize the execution, delivery and
performance of this Agreement by the Parent Companies and the consummation of
the transactions contemplated hereby. Except as otherwise provided herein, no
vote of the holders of any class or series of Parent's capital stock is
necessary to approve this Agreement and the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each of the Parent
Companies and is a valid and binding obligation of each of the Parent Companies,
enforceable against each of the Parent Companies in accordance with its terms,
except that (a) such enforcement may be subject to any bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other Laws, now or hereafter
in effect, relating to or limiting creditors' rights generally and (b) the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.
Section 5.03 Capitalization.
(a) The authorized capital stock of Parent consists of 900,000,000 Parent
Ordinary Shares, 900,000,000 cumulative preferred shares with a par value of EUR
0.02 (the "Parent Preferred Shares") and 23,100 Priority Shares with a par value
of EUR 0.02 (the "Parent Priority Shares"). At the close of business on August
31, 2000: (i) 418,848,000 Parent Ordinary Shares were issued and outstanding,
(ii) 10,536,000 Parent Ordinary Shares were reserved for issuance under Parent's
stock option and stock benefit plans and arrangements ("Parent Stock Option
Plans"), (iii) 13,808,000 Parent Ordinary Shares were issuable upon conversion
of Parent's 2.5% Convertible Subordinated Bonds due 2005, (iv) 13,960,000 Parent
Ordinary Shares were issuable upon conversion of Parent's 4.25% Convertible
Subordinated Notes due 2004, (v) up to 900,000,000 Parent Preferred Shares are
available for issuance upon the exercise of an option granted to the preference
share foundation (Stichting Preferente Aandelen ASML) (the "Preference Share
Option") to acquire a number of Parent Preferred Shares equal to the number of
Parent Ordinary Shares outstanding at the time of the exercise of the Preference
Share Option, (vi) no Parent Preferred Shares were issued and outstanding, (vii)
23,100 Parent Priority Shares were issued and outstanding, and (viii) 3,372
Parent Ordinary Shares were held by Parent in its treasury. Since August 31,
2000, Parent has not issued any shares of capital stock of Parent other than the
issuance of Parent Ordinary Shares upon (i) the exercise of options under the
Parent Stock Option Plans and (ii) the conversion of Parent's 2.5% Convertible
Subordinated Bonds due 2005 and 4.25% Convertible Subordinated Notes due 2004.
All issued and outstanding shares of capital stock of Parent are, and all Parent
Ordinary Shares to be issued hereunder shall be, upon issuance, duly authorized,
validly issued, fully paid and nonassessable. Except for the Preference Share
Option, the rights provided for by the Parent Priority Shares, the options
granted under the Parent Stock Option Plans, and the conversion rights
associated with Parent's 2.5% Convertible Subordinated Bonds due 2005 and
Parent's Convertible Subordinated Notes due 2004, (A) Parent is not bound by,
obligated under, or party to an Issuance Obligation with respect to any security
of Parent and (B) there is no outstanding Voting Debt of Parent. There are no
outstanding obligations of Parent to repurchase, redeem or otherwise acquire any
outstanding securities of Parent. There are no restrictions of any kind which
prevent or restrict the payment of dividends by Parent on the Parent Ordinary
Shares and there are no limitations or restrictions on the right to vote, sell
or otherwise dispose of Parent Ordinary Shares.
(b) The authorized capital stock of HoldCo consists of 100 shares of HoldCo
Common Stock, all of which are validly issued and outstanding, fully paid and
nonassessable and are owned by Parent free and clear of all Liens. The
authorized capital stock of Merger Sub consists of 100 shares of Merger Sub
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Common Stock, all of which are validly issued and outstanding, fully paid and
nonassessable and are owned by HoldCo free and clear of all Liens.
Section 5.04 Consents and Approvals; No Violations. The execution and
delivery of this Agreement by the Parent Companies does not, and the
consummation by the Parent Companies of the transactions contemplated hereby
will not, result in any violation of, or default (with or without notice or
lapse of time or both) under: (a) any provision of any of the Organizational
Documents of the Parent Companies, or (b) assuming that the filings,
registrations, authorizations, consents and approvals described in clauses (i),
(ii), (iii) and (iv) of this Section 5.04 are made or obtained, any Law
applicable to the Parent Companies or any of their respective properties or
assets, other than, in the case of clause (b), any such violations or defaults
that could not reasonably be expected to, individually or in the aggregate, have
a Parent Material Adverse Effect. No filing or registration with, or
authorization, consent or approval of, any Governmental Authority is required by
or with respect to the Parent Companies in connection with the execution and
delivery of this Agreement by the Parent Companies or the consummation of the
transactions contemplated hereby, except: (i) in connection, or in compliance,
with the provisions of any applicable Antitrust Laws, (ii) in compliance with
the provisions of the Securities Act and Exchange Act, the securities Laws of
the Netherlands and the rules and regulations of the NASDAQ, (iii) for the
filing of the Certificate of Merger with the office of the Secretary of State of
the State of Delaware and appropriate documents with the relevant authorities of
other countries or states in which each of the Parent Companies is qualified to
do business, (iv) for the filing with the United States Committee on Foreign
Investments pursuant to Exon-Florio and (v) for such other consents, orders,
authorizations, registrations, declarations and filings the failure of which to
obtain or make could not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect. None of the Parent Companies
is in violation of (i) its Organizational Documents or (ii) any applicable Law,
except, in the case of clause (ii), for any violations that could not reasonably
be expected to, individually or in the aggregate, have a Parent Material Adverse
Effect. There is no existing default, event of default or event that, but for
the giving of notice or lapse of time or both, would constitute a default or
event of default under any Contract which could reasonably be expected to,
individually or in the aggregate, have a Parent Material Adverse Effect.
Section 5.05 Parent Reports and Financial Statements.
(a) Since December 31, 1998, Parent and, to the extent applicable, Parent
and its Subsidiaries have filed all forms, reports and documents with the SEC
required to be filed by it pursuant to the federal securities Laws and the SEC
rules and regulations thereunder, and all forms, reports, schedules,
registration statements and other documents filed with the SEC by Parent (the
"Parent SEC Reports") and, to the extent applicable, its Subsidiaries have
complied in all material respects with all applicable requirements of the
federal securities Laws and the SEC rules and regulations thereunder, as of the
date of such filing, or, if amended prior to the date of this Agreement, as of
the date of the last such amendment. As of their respective dates, the Parent
SEC Reports did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The audited consolidated financial statements and the unaudited
consolidated interim financial statements of Parent included in the Parent SEC
Reports were prepared in accordance with GAAP applied on a consistent basis
(except as may be indicated therein or in the notes or schedules thereto) and
present fairly, in all material respects, the consolidated financial position of
Parent and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations, stockholders' equity, comprehensive income
(loss) and cash flows for the periods then ended, except that the unaudited
consolidated interim financial statements were, or are, subject to normal and
recurring adjustments which were not or are not expected to be material to
Parent.
(b) Except as disclosed in the Parent SEC Reports, neither Parent nor any
of its Subsidiaries has any liability or obligation of any nature (whether
accrued, absolute, contingent or otherwise), in each case, that is required by
GAAP to be set forth on a consolidated balance sheet of Parent or related
financial statement footnotes), except for (i) liabilities and obligations under
this Agreement or incurred in connection with the transactions contemplated
hereby, and (ii) liabilities and obligations incurred in the
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ordinary course of business consistent with past practice since June 30, 2000
which could not reasonably be expected to, individually or in the aggregate,
have a Parent Material Adverse Effect.
Section 5.06 Information to Be Supplied. None of the information supplied
or to be supplied by Parent or the Purchaser for inclusion in (i) the
Registration Statement or (ii) the Proxy Statement will, in the case of the
Registration Statement, at the time it becomes effective or, in the case of the
Proxy Statement or any amendments thereof or supplements thereto, at the time of
the initial mailing of the Proxy Statement and any amendments or supplements
thereto, and at the time of the Company Stockholder Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The Registration
Statement, as of its effective date, will comply (with respect to information
relating to the Parent Companies) as to form in all material respects with the
requirements of the Securities Act, and as of the date of its initial mailing
and as of the date of the Company Stockholder Meeting, the Proxy Statement will
comply (with respect to information relating to the Parent Companies) as to form
in all material respects with the applicable requirements of the Exchange Act.
Notwithstanding the foregoing, the Parent Companies make no representation with
respect to any statement in the foregoing documents based upon information
supplied by the Company for inclusion therein.
Section 5.07 Absence of Certain Changes. Except as disclosed in the Parent
SEC Reports, since June 30, 2000, (a) the businesses of Parent and its
Subsidiaries have been conducted in the ordinary course consistent with past
practice and (b) there has not occurred any event, occurrence, development or
state of circumstances or facts that has had, or could reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
Section 5.08 Broker's or Finder's Fee. Except for Merrill Lynch & Co., no
agent, broker, Person or firm acting on behalf of the Parent Companies is, or
shall be, entitled to any fee, commission or broker's or finder's fees from any
of the parties, or from any Person controlling, controlled by, or under common
control with any of the parties, in connection with this Agreement or any of the
transactions contemplated hereby.
Section 5.09 Ownership of Capital Stock. Except as contemplated by this
Agreement, neither Parent nor any of its Subsidiaries beneficially owns,
directly or indirectly, any capital stock of the Company or is a party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of any capital stock of the Company, other than as
contemplated by this Agreement.
Section 5.10 Pooling-of-Interests; Reorganization. To the knowledge of
Parent, neither Parent nor any of its directors, officers, Affiliates,
Subsidiaries, employees, agents, representatives or stockholders has taken any
action or failed to take any action which would jeopardize (i) the treatment of
the Merger as a pooling-of-interests business combination for accounting
purposes or (ii) the qualification of the Merger as a reorganization within the
meaning of Section 368(a) of the Code.
Section 5.11 Litigation. There is no investigation, action, suit or
proceeding pending against Parent or its Subsidiaries or, to the knowledge of
Parent, threatened against Parent or its Subsidiaries, at law or in equity, or
before or by any Governmental Authority which could reasonably be expected to
have a Parent Material Adverse Effect. Neither Parent nor any of its
Subsidiaries is subject to any judgment, order or decree entered in any lawsuit
or proceeding which could reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect.
Section 5.12 Intellectual Property. Except as could not reasonably be
expected to, individually or in the aggregate, have a Parent Material Adverse
Effect:
(a) Neither Parent nor any of its Subsidiaries will be, as a result of
the execution, delivery or performance of Parent's obligations hereunder,
in violation of, or lose any rights pursuant to, any patents, trademarks,
trade names, service marks, copyrights together with any registrations and
applications therefor, Internet domain names, net lists, schematics,
inventories, technology, trade secrets, source codes, know-how, computer
software programs or applications, including all object and
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source codes and tangible or intangible proprietary information or material
that are used in the business of Parent and any of its Subsidiaries as
currently conducted (the "Parent Intellectual Property").
(b) No claims with respect to the Parent Intellectual Property have
been asserted in writing challenging the ownership, validity,
enforceability or effectiveness of any of the Parent Intellectual Property.
Section 5.13 Compliance with Laws.
(a) The businesses of Parent and its Subsidiaries are not being conducted
in violation of any applicable Law, except for violations which could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect.
(b) Parent and its Subsidiaries hold, to the extent legally required, all
Permits that are required for the operation of the respective businesses of
Parent and/or its Subsidiaries as now conducted, except where the failure to
hold any such Permit could not reasonably be expected to, individually or in the
aggregate, have a Parent Material Adverse Effect, and there has not occurred any
default under any such Permit, except to the extent that such default could not
reasonably be expected to, individually or in the aggregate, have a Parent
Material Adverse Effect.
ARTICLE VI
COVENANTS
Section 6.01 Conduct of the Business.
(a) From and after the date hereof and prior to the Effective Time or the
date, if any, on which this Agreement is earlier terminated pursuant to Section
8.01 and except (x) as may be agreed in writing by Parent (which consent shall
not be unreasonably withheld), (y) as may be expressly permitted pursuant to
this Agreement or (z) as set forth in Section 6.01 of the Company Disclosure
Schedule, the Company:
(i) shall, and shall cause each of its Subsidiaries to, conduct its
operations in the ordinary course of business in substantially the same
manner as heretofore conducted;
(ii) shall use its reasonable best efforts, and shall cause each of
its Subsidiaries to use its reasonable best efforts, to preserve intact its
business organization and goodwill, keep available the services of its
current officers and other key employees and preserve its relationships
with those persons having business dealings with the Company and its
Subsidiaries;
(iii) shall notify Parent of any emergency or other change in the
normal course of its or its Subsidiaries' respective businesses or in the
operation of its or its Subsidiaries' respective properties, and of any
complaints, investigations or hearings (or communications indicating that
the same may be contemplated) of any Governmental Authority, if such
emergency, change, complaint, investigation or hearing could reasonably be
expected to have a Company Material Adverse Effect;
(iv) shall not, and shall not permit any of its Subsidiaries to,
authorize, declare or pay any dividends on or make any distribution with
respect to its outstanding shares of capital stock or other equity
interests;
(v) shall not, and shall not permit any of its Subsidiaries to, split,
combine or reclassify any of its capital stock or other equity interests or
issue or authorize or propose the issuance of any other securities or other
equity interests in respect of, in lieu of or in substitution for, shares
of its capital stock or other equity interests other than the issuance of
capital stock pursuant to options, warrants and convertible securities
outstanding as of the date of this Agreement or permitted pursuant to
Section 6.01(viii);
(vi) shall not, and shall not permit any of its Subsidiaries to, enter
into or amend any employment, severance or similar agreements or
arrangements with any of their respective directors or
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officers, or enter into, adopt or amend any other Company Employee Benefit
Plan (other than to address non-material issues or make changes that do not
have, individually or in the aggregate, a financial impact on the Company
Employee Benefit Plans);
(vii) shall not, and shall not permit any of its Subsidiaries to,
authorize, propose or announce an intention to authorize or propose, or
enter into an agreement with respect to, any merger, consolidation or
business combination (other than the Merger);
(viii) shall not, and shall not permit any of its Subsidiaries to,
propose or adopt any amendment to its Organizational Documents;
(ix) shall not, and shall not permit any of its Subsidiaries to, issue
or authorize the issuance of, or agree to issue or sell any shares of their
capital stock of any class, or any other equity interests (in each case,
whether through the issuance or granting of options, warrants, commitments,
subscriptions, rights to purchase or otherwise); provided that the Company
shall be permitted to (i) grant options, at an exercise price equal to the
fair market value of the Company Common Stock as of the date of such grant,
to purchase up to an aggregate of 300,000 shares of Company Common Stock
per quarter pursuant to the Company's option plans currently in effect,
provided that in no event shall the Company be permitted to grant options
to purchase in excess of an aggregate of 20,000 shares of Company Common
Stock to any single Person under any of the foregoing plans, taken as a
whole and (ii) issue shares of Company Common Stock pursuant to the terms
of the ESPP;
(x) shall not, and shall not permit any of its Subsidiaries to, grant,
confer or award any options, warrants, conversion rights or other rights,
not existing on the date hereof, to acquire any shares of its capital stock
or any other equity interests; provided that the Company shall be permitted
to (i) grant options at an exercise price equal to the fair market value of
the Company Common Stock as of the date of such grant to purchase up to an
aggregate of 300,000 shares of Company Common Stock per quarter pursuant to
the Company's option plans currently in effect, provided that in no event
shall the Company be permitted to grant options to purchase in excess of an
aggregate of 20,000 shares of Company Common Stock to any single Person
under any of the foregoing plans, taken as a whole and (ii) issue shares of
Company Common Stock pursuant to the terms of the ESPP;
(xi) shall not, and shall not permit any of its Subsidiaries to,
purchase, redeem or otherwise acquire any shares of its capital stock, or
any other equity interests or any rights, warrants or options to acquire
any such shares or interests, except repurchases of unvested shares at cost
in connection with the termination of the employment relationship with any
employee pursuant to stock option or purchase agreements in effect on the
date hereof or the net exercise of options or warrants currently
outstanding or permitted hereunder;
(xii) shall not, and shall not permit any of its Subsidiaries to,
incur, assume or prepay any indebtedness or any other material liabilities,
other than in the ordinary course of business consistent with past
practice;
(xiii) shall not, and shall not permit any of its Subsidiaries to, (i)
make any loans, advances or capital contributions to, or investments in,
any other person, or (ii) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than indebtedness, issuances of debt securities,
guarantees, loans, advances, capital contributions, investments, payments,
discharges or satisfactions incurred or committed to in the ordinary course
of business consistent with past practice;
(xiv) shall not, and shall not permit any of its Subsidiaries to,
sell, lease, license, mortgage or otherwise encumber or subject to any Lien
or otherwise dispose of any of its properties or assets (including
securitizations), other than in the ordinary course of business consistent
with past practice;
(xv) shall not, and shall not permit any of its Subsidiaries to, (A)
make or change any material Tax election or settle or compromise any
material Tax liability other than in the ordinary course of business
consistent with past practices or (B) change its fiscal year;
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(xvi) except as described in the Company SEC Reports, or as required
by a Governmental Authority, shall not change its methods of accounting
(including making any material write-off or reduction in the carrying value
of any assets) in effect at June 30, 2000, other than as required by
changes in GAAP as agreed by the Company's independent auditors;
(xvii) except as contemplated by this Agreement, shall not amend or
modify the Rights Agreement;
(xviii) shall not, and shall not permit any of its Subsidiaries to,
terminate, amend or otherwise modify any Contract between the Company and
any of its Subsidiaries, on the one hand, and Intel Corporation and its
Subsidiaries, on the other hand;
(xix) shall not, and shall not permit any of its Subsidiaries to,
enter into, amend or otherwise modify any existing supply Contract or other
Contract that obligates the Company or any Subsidiary to make aggregate
payments, or incur aggregate liabilities or other obligations, in excess of
$10,000,000; and
(xx) shall not, and shall not permit any of its Subsidiaries to,
agree, in writing or otherwise, to take any of the foregoing actions or
take any action which would (x) make any representation or warranty in
Article V untrue or incorrect or (y) result in any of the conditions to the
Merger set forth in Article VII not being satisfied.
(b) From and after the date hereof and prior to the Effective Time or the
date, if any, on which this Agreement is earlier terminated pursuant to Section
8.01 and except (x) as may be agreed in writing by the Company (which consent
shall not be unreasonably withheld), (y) as may be expressly permitted pursuant
to this Agreement or (z) as set forth in Section 6.02 of the Parent Disclosure
Schedule, Parent:
(i) shall not authorize, declare or pay any dividends on or make any
distribution with respect to its outstanding shares of capital stock or
other equity interests; and
(ii) shall not agree, in writing or otherwise, to take any action
which would result in any of the conditions to the Merger set forth in
Article VII not being satisfied.
Section 6.02 Access to Information Concerning Properties and Records.
(a) During the period commencing on the date hereof and ending on the
earlier of (i) the Closing Date and (ii) the date on which this Agreement is
terminated pursuant to Section 8.01, the Company shall, and shall cause its
Subsidiaries to, upon reasonable notice, afford Parent, and its respective
counsel, accountants, consultants and other authorized representatives, access
during normal business hours full and complete access to its and its
Subsidiaries' employees, properties, books and records (including Tax Returns)
in order to make such investigations as they desire of the Company's and its
Subsidiaries' affairs; such investigation shall not, however, affect the
representations and warranties made by the Company in this Agreement. The
Company shall furnish promptly to Parent (x) a copy of each form, report,
schedule, statement, registration statement and other document filed by it or
its Subsidiaries during such period pursuant to the requirements of federal,
state or foreign securities Laws and (y) all other information concerning its or
its Subsidiaries' business, properties and personnel as Parent may reasonably
request.
(b) During the period commencing on the date hereof and ending on the
earlier of (i) the Effective Time and (ii) the date on which this Agreement is
terminated pursuant to Section 8.1, Parent shall, and shall cause its
Subsidiaries to, upon reasonable notice, afford the Company, and its respective
counsel, accountants, consultants and other authorized representatives, access
during normal business hours full and complete access to its and its
Subsidiaries' employees, properties, books and records (including Tax Returns)
in order to make such investigations as they desire of Parent's and its
Subsidiaries' affairs; such investigation shall not, however, affect the
representations and warranties made by Parent in this Agreement.
Section 6.03 Confidentiality. The parties acknowledge that Company and
Parent have previously executed Confidentiality Agreements, dated September 24,
1999 and August 10, 2000 (the "Confidentiali-
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ty Agreements"), and that the Confidentiality Agreements shall continue in full
force and effect in accordance with their terms.
Section 6.04 Company Stockholder Meeting; Preparation of Proxy Statement.
(a) Company Stockholder Meeting. The Company, acting through its Board of
Directors, shall, in accordance with applicable Law, promptly call, convene and
hold a meeting of the Company's stockholders (the "Company Stockholder Meeting")
as soon as practicable after the date upon which the Registration Statement
becomes effective for the purpose of acting on this Agreement and the Merger,
and the Company agrees that this Agreement and the Merger shall be submitted to
a vote of the Company's stockholders at such meeting. Once the Company
Stockholder Meeting has been called and noticed, the Company shall not postpone
or adjourn the Company Stockholder Meeting (other than for the absence of a
quorum) without the consent of Parent. The Company shall take all action
necessary to solicit from its stockholders proxies, and shall take all other
action necessary and advisable, to secure the vote of stockholders required by
applicable Law and the Company's Organizational Documents to obtain the Company
Stockholder Approval. Subject to the Company's right, pursuant to Section 6.05,
to withdraw or modify the Recommendation prior to the Company Stockholder
Approval, (i) the Company's Board of Directors shall include, or permit Parent
to include, in the Proxy Statement and the Registration Statement a copy of the
Recommendation, and (ii) neither the Company's Board of Directors nor any
committee thereof shall amend, modify or withdraw the Recommendation in a manner
adverse to Parent or take any action or make any statement inconsistent with the
Recommendation. Notwithstanding the foregoing, the Board of Directors of the
Company shall submit this Agreement and the Merger to the Company's stockholders
for their adoption, whether or not the Board of Directors of the Company
determines in accordance with Section 6.05 not to make the Recommendation.
(b) Preparation of Registration Statement and Proxy Statement. As soon as
practicable after the date of this Agreement, Parent and the Company shall
prepare, and Parent shall file with the SEC and any other non-U.S. entity,
including AEX and the Netherlands Merger Committee, the Registration Statement,
in which the Proxy Statement will be included as Parent's prospectus and any
other filings required under any Laws or rules relating to the Merger and the
transactions contemplated by this Agreement. Each of the Company and Parent
shall use its reasonable best efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing. The Company shall mail the Proxy Statement to its stockholders as
promptly as practicable following the date on which it is cleared by the SEC and
the Registration Statement is declared effective. Parent shall take any action
required to be taken under any applicable foreign securities Laws or state
securities or blue sky Laws in connection with the issuance of Parent Ordinary
Shares in the Merger and the Company shall furnish all information concerning
the Company and its stockholders as may reasonably be requested in connection
with any such action. No amendment or supplement to the Proxy Statement shall be
made by the Company or Parent without the approval of the other party, which
shall not be unreasonably withheld or delayed. Each party shall advise the other
party, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment has
been filed, the issuance of any stop order, the suspension of the qualification
of Parent Ordinary Shares issuable in connection with the Merger for offering or
sale in any jurisdiction, or any request by the SEC for amendment of the Proxy
Statement or comments thereon and responses thereto or requests by the SEC for
additional information. If at any time prior to the Effective Time, the Company
or Parent discovers any information relating to either party, or any of their
respective Affiliates, officers or directors, that should be set forth in an
amendment or supplement to the Registration Statement or Proxy Statement, so
that such document would not include any misstatement of a material fact or omit
to state any material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, the party that
discovers such information shall promptly notify the other party and an
appropriate amendment or supplement describing such information shall be
promptly filed with the SEC and, to the extent required by Law or regulation,
disseminated to the stockholders of the Company.
(c) As soon as practicable after the date of this Agreement and if and to
the extent required under the Laws of the Netherlands, Parent shall file with
the AEX a prospectus with respect to the listing of
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Parent Ordinary Shares with the AEX (this prospectus and such documents included
therein, together with any supplements or amendments thereto, the "AEX
Documents"). Parent and the Company each agrees promptly to correct any
information provided by it for use in the AEX Documents if and to the extent
that such information shall have become false or misleading in any material
respect. Parent agrees to take all steps necessary to cause the AEX Documents as
so corrected to be filed with the AEX and as so corrected to be publicly made
available in the Netherlands, in each case, as and to the extent required by
applicable Laws of the Netherlands. The Company and its counsel shall be given
an opportunity to review and comment on the AEX Documents prior to their being
filed with the AEX or being publicly made available in the Netherlands. Parent
agrees to provide the Company and its counsel with any comments Parent or its
counsel may receive from the AEX or its staff with respect to the AEX Documents
promptly after the receipt of such comments and shall provide the Company and
its counsel an opportunity to review and comment on the response of Parent to
such comments.
Section 6.05 No Solicitation.
(a) The Company shall, and shall cause its Subsidiaries, officers,
directors, employees, financial advisors, attorneys and other advisors,
representatives and agents of the Company and its Subsidiaries to, immediately
cease and cause to be terminated any solicitation, activity, discussions or
negotiations with third parties with respect to any Takeover Proposal. From and
after the date hereof, the Company shall not, nor shall it authorize or permit
any of its Subsidiaries, nor shall it authorize or permit any officer, director
or employee of or any financial advisor, attorney or other advisor,
representative or agent of it or any of its Subsidiaries, to (i) directly or
indirectly, solicit, facilitate, initiate or encourage, including by way of
furnishing information, the making or submission of any Takeover Proposal, (ii)
enter into any agreement, arrangement or understanding with respect to any
Takeover Proposal or enter into any agreement, arrangement or understanding
requiring it to abandon, terminate or fail to consummate the Merger or any other
transaction contemplated by this Agreement, (iii) initiate or participate in any
way in any discussions or negotiations regarding, or furnish or disclose to any
Person (other than a party to this Agreement) any information with respect to,
any Takeover Proposal or (iv) grant any waiver or release under any standstill
or similar agreement with respect to any class of the Company's equity
securities or any other equity interest; provided that, prior to obtaining the
Company Stockholder Approval, in response to an unsolicited Takeover Proposal
that did not result from the breach of this Section 6.05 and following delivery
to Parent of written notice of the Takeover Proposal in compliance with its
obligations under Section 6.05(c), the Company may participate in discussions or
negotiations with or furnish information (pursuant to a confidentiality
agreement with customary terms) to any third party which makes a bona fide
written unsolicited Takeover Proposal if and only to the extent that (A) a
majority of the Company's Board of Directors determines in good faith (after
consultation with its financial advisors) that such Takeover Proposal
constitutes a Superior Proposal and (B) a majority of the Company's Board of
Directors determines in good faith (after receiving the advice of outside legal
counsel) that the failure to take such action would be inconsistent with its
fiduciary duties under applicable Law. Without limiting the foregoing, the
Company agrees that any violation of the restrictions set forth in this Section
6.05 by any of its, or any of its Subsidiaries', officers, employees, or
directors or any advisor, representative, consultant or agent retained by the
Company or any of its Subsidiaries in connection with the transactions
contemplated hereby, whether or not such Person is purporting to act on behalf
of the Company or any of its Subsidiaries, shall constitute a breach of this
Section 6.05 by the Company.
For purposes of this Agreement, "Takeover Proposal" means any inquiry,
proposal or offer from any Person or group relating to (i) any direct or
indirect acquisition or purchase of 15% or more of the assets of the Company or
any of its Subsidiaries or 15% or more of any class of equity securities or
other equity interest of the Company or any of its Subsidiaries, (ii) any tender
offer or exchange offer that, if consummated, would result in any Person
beneficially owning 15% or more of any class of equity securities or other
equity interest of the Company or any of its Subsidiaries, (iii) any merger,
consolidation, business combination, sale of all of the assets,
recapitalization, liquidation or a dissolution of, or similar transaction of the
Company or any of its Subsidiaries other than the Merger or (iv) any sale,
lease, exchange, transfer or other disposition of 15% or more of the assets of
the Company and its Subsidiaries, taken as a whole, in
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a single transaction or series of transactions (whether or not related); and
"Superior Proposal" means a bona fide written Takeover Proposal to purchase all
or substantially all of the outstanding equity securities of the Company (x) on
terms which a majority of the Company's Board of Directors determines in good
faith (after consultation with its financial advisors) to be superior to the
Company and its stockholders (in their capacity as stockholders) (taking into
account, among other things, all legal, financial, regulatory and other aspects
of the proposal and identity of the offeror) as compared to the transactions
contemplated hereby and any alternative proposed by Parent and (y) which is
reasonably capable of being consummated.
(b) Except as expressly permitted by this Section 6.05, neither the Board
of Directors of the Company nor any committee thereof shall (i) withdraw or
modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent, the Recommendation, (ii) approve or recommend, or propose publicly to
approve or recommend, any Takeover Proposal or (iii) cause the Company to enter
into any letter of intent, agreement in principle, acquisition agreement or
other similar agreement (each, an "Acquisition Agreement") related to any
Takeover Proposal. Notwithstanding the foregoing, in the event that prior to
obtaining Company Stockholder Approval, the Board of Directors of the Company
receives a Superior Proposal, the Board of Directors of the Company may, if it
determines in good faith, by resolution duly adopted after consultation with its
outside counsel, that the failure to withdraw or modify the Recommendation would
be inconsistent with its fiduciary duties under applicable Law, withdraw or
modify the Recommendation, or take a position permitted by Rule 14e-2(a)(2) or
(3) under the Exchange Act in order to comply with Rule 14d-9 or Rule 14e-2
under the Exchange Act (provided that any such withdrawal or modification shall
not change the approval of the Board of Directors of the Company for purposes of
causing any Takeover Statute or other state Law or the Rights Agreement to be
inapplicable to the transactions contemplated by this Agreement), but only at a
time that is after the third Business Day following Parent's compliance with its
obligations set forth in Section 6.05(c) with the intent of enabling Parent to
agree to a modification of the terms and conditions of this Agreement so that
the transactions contemplated hereby may be effected.
(c) The Company agrees that in addition to the obligations of the Company
set forth in paragraphs (a) and (b) of this Section 6.05, as promptly as
practicable but in any event within one Business Day after receipt thereof, the
Company shall advise Parent in writing of any request for information or any
Takeover Proposal, or any inquiry, discussions or negotiations with respect to
any Takeover Proposal, the terms and conditions of such request, Takeover
Proposal, inquiry, discussions or negotiations and the Company shall, as
promptly as practicable but in any event within one Business Day after receipt
thereof, provide to Parent copies of any written materials received by the
Company in connection with any of the foregoing, and the identity of the Person
or group making any such request, Takeover Proposal or inquiry or with whom any
discussions or negotiations are taking place. The Company agrees that it shall
inform Parent of any material changes of any such request, Takeover Proposal or
inquiry. The Company agrees that it shall simultaneously provide to Parent any
non-public information concerning the Company provided to any other Person or
group in connection with any Takeover Proposal which was not previously provided
to Parent.
Section 6.06 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and the Parent Companies shall give prompt notice to
the Company, of the occurrence, or failure to occur, of any event, which
occurrence or failure to occur could be likely to cause any representation or
warranty contained in this Agreement to be untrue or any covenant, condition or
agreement not to be complied with or satisfied at any time from the date of this
Agreement to the Effective Time. Each of the Company and Parent shall give
prompt notice to the other party of any notice or other communication from any
third party alleging that the consent of such third party is or may be required
in connection with the transactions contemplated by this Agreement.
Section 6.07 Reasonable Best Efforts. Subject to the terms and conditions
herein provided, the Company and each of the Parent Companies shall use its
respective reasonable best efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or advisable
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under applicable Laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
Section 6.08 Consents. The Company and each of the Parent Companies shall
cooperate, and use its respective reasonable best efforts, in as timely a manner
as is reasonably practicable, to make, or cause to be made, all filings and
obtain, or cause to be obtained, all Permits, authorizations, consents and
approvals of Governmental Authorities and other third parties necessary to
consummate the transactions contemplated by this Agreement, including making a
filing with the United States Committee on Foreign Investments pursuant to
Exon-Florio. Each of the parties shall furnish, or cause to be furnished, to the
other parties such necessary information and reasonable assistance as such other
parties may reasonably request in connection with the foregoing and shall
provide the other parties with copies of all filings made by such party with any
Governmental Authority or other third party or any other information supplied by
such party to a Governmental Authority or other third party in connection with
this Agreement.
Section 6.09 Antitrust Filings.
(a) Without limiting the generality of Section 6.08, the Company and each
of the Parent Companies shall (i) promptly take, or cause to be taken, all
actions necessary to make the filings required of the Company or Parent or any
of their respective Affiliates or Subsidiaries, under any Antitrust Law,
including the HSR Act, (ii) comply at the earliest practicable date with any
request for additional information or documentary material received by the
Company or Parent or any of their Affiliates or Subsidiaries, from any
Governmental Authority (including the Federal Trade Commission or the Antitrust
Division of the Department of Justice pursuant to the HSR Act) and (iii)
cooperate with each other in connection with any such filing and with resolving
any investigation or other inquiry concerning the transactions contemplated by
this Agreement commenced by any Governmental Authority (including the Federal
Trade Commission or the Antitrust Division of the Department of Justice or state
attorneys general).
(b) In furtherance and not in limitation of the covenants of the Company
and Parent contained in Section 6.08 and Section 6.09(a), each of the Company
and Parent shall use its commercially reasonable efforts to resolve such
objections, if any, as may be asserted with respect to the Merger or any other
transactions contemplated by this Agreement under any Antitrust Law. If any
administrative, judicial or legislative action or proceeding is instituted (or
threatened to be instituted) challenging the Merger or any other transaction
contemplated by this Agreement as violative of any Antitrust Law, each of the
Company and Parent shall cooperate and use its commercially reasonable efforts
vigorously to contest and resist any such action or proceeding, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) that is in effect and
that restricts, prevents or prohibits consummation of the Merger or any other
transaction contemplated by this Agreement. Notwithstanding the foregoing or
anything contained in this Agreement to the contrary, in no event shall Parent
be required to, or the Company be permitted to, agree to any divestiture of any
businesses, assets or product lines of the Company, Parent, or any of their
respective Subsidiaries in order to enable any approval under any Antitrust Law
that is necessary to consummate the Merger or any other transaction contemplated
by this Agreement, in accordance with their respective terms, to be received.
(c) Each of the Company and Parent shall promptly inform the other of any
material communication received by such party or any of its Affiliates from the
Federal Trade Commission, the Antitrust Division of the Department of Justice or
any other Governmental Authority regarding any of the transactions contemplated
by this Agreement. Each of the Company and Parent shall advise the other
promptly of any understandings, undertakings or agreements which such party or
any of its Affiliates or Subsidiaries proposes to make or enter into with the
Federal Trade Commission, the Antitrust Division of the Department of Justice or
any other Governmental Authority in connection with the transactions
contemplated by this Agreement.
Section 6.10 Indemnification; Directors' and Officers' Insurance.
(a) From and after the Effective Time, the Surviving Corporation shall, to
the fullest extent permitted under applicable Law, indemnify and hold harmless,
each present and former director or officer
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of the Company and of each of its Subsidiaries and each such person who served
at the request of the Company or any of its Subsidiaries as a director, officer,
trustee, partner, fiduciary, employee or agent of another corporation,
partnership, joint venture, trust, pension or other employee benefit plan or
enterprise (collectively, the "Indemnified Parties") against all costs and
expenses (including attorneys' fees and expenses), judgments, fines, losses,
claims, damages, liabilities and amounts paid in settlement of any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, administrative or investigative, arising out of
or relating to any matters occurring on or before the Effective Time.
(b) Following the Effective Time, Parent and HoldCo shall cause the
Surviving Corporation to keep in effect in its Organizational Documents a
provision for a period of not less than six years from the Effective Time (or,
in the case of matters occurring prior to the Effective Time which have not been
resolved prior to the sixth anniversary of the Effective Time, until such
matters are finally resolved) which provides for indemnification of the
Indemnified Parties to the fullest extent permitted by the DGCL. Parent and
HoldCo shall also cause the Surviving Corporation to honor the indemnification
agreements between the Company and its directors and officers as set forth in
Section 6.10 of the Company Disclosure Schedule.
(c) Parent and HoldCo shall cause to be maintained in effect for not less
than six years from the Effective Time the current policies of the directors'
and officers' liability insurance ("D&O Insurance") maintained by the Company
(provided that Parent and HoldCo may substitute therefor policies of at least
the same coverage containing terms and conditions which are no less advantageous
to the Indemnified Parties and provided there shall be no lapse of coverage)
with respect to matters occurring on or prior to the Effective Time; provided,
however, that Parent and HoldCo shall not be required to pay an annual premium
for D&O Insurance in excess of 150% of the last annual premium paid prior to the
date hereof, but in such case shall purchase as much coverage as possible for
such amount.
Section 6.11 Public Announcements. The Parent Companies and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to the transactions contemplated by
this Agreement and shall not issue any such press release or make any such
public statement prior to such consultation and review by the other party of
such release or statement, except as may be required by Law, court process or by
obligations pursuant to any listing agreement with a national securities
exchange or the rules and regulations of the Amsterdam Exchange N.V.
Section 6.12 NASDAQ. Parent shall use its reasonable best efforts to cause
the Parent Ordinary Shares to be issued in connection with the Merger to be
listed on the NASDAQ, subject to official notice of issuance.
Section 6.13 Rule 145/Pooling Affiliate Letters. Prior to mailing the
Proxy Statement, the Company shall deliver to Parent, and Parent shall deliver
to the Company, a list of names and addresses of those Persons who, in the
opinion of the Company or Parent, as the case may be, may, at the time of the
Company Stockholder Meeting, be deemed to be "affiliates" of the Company within
the meaning of Rule 145 under the Securities Act and for the purposes of
applicable interpretations regarding the pooling-of-interests business
combination method ("Rule 145/Pooling Affiliates"). Each party shall exercise
all reasonable best efforts to deliver or cause to be delivered to the other
party, not later than 30 days prior to the Effective Time, from each of such
Rule 145/Pooling Affiliates of such party identified in the foregoing list, an
affiliate letter in the form attached hereto as Exhibit B or C, respectively.
Section 6.14 Employee Benefits.
(a) Parent and HoldCo shall cause the Surviving Corporation and its
successors to continue to maintain, for a period of no less than one year
following the Effective Time for all employees of the Company and its
Subsidiaries and their eligible dependents, employee benefits which, in the
aggregate, are no less favorable to such employees and their eligible dependents
than those presently in effect. Nothing contained herein shall prohibit Parent,
HoldCo or the Surviving Corporation or its Subsidiaries from amending or
terminating any Company Employee Benefit Plan in accordance with applicable Law.
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(b) Except to the extent necessary to avoid duplication of benefits, Parent
and HoldCo shall, or shall cause the Surviving Corporation to, give employees of
the Company full credit for purposes of eligibility and vesting under any
employee benefit plans or arrangements maintained by Parent, the Surviving
Corporation or any Subsidiary of Parent in which such employees are eligible to
participate for such employees' service with the Company to the same extent
recognized by the Company immediately prior to the Effective Time. Parent and
HoldCo shall, or shall cause the Surviving Corporation to, (i) waive all
limitations as to preexisting conditions, exclusions and waiting periods with
respect to participation and coverage requirements applicable to such employees
under any welfare plan that such employees may be eligible to participate in
after the Effective Time, other than limitations or waiting periods that are
already in effect with respect to such employees and that have not been
satisfied as of the Effective Time under any welfare plan maintained for such
employees immediately prior to the Effective Time and (ii) provide each such
employee with credit for any co-payment offsets, out-of-pocket deductibles and
similar expenses paid prior to the Effective Time in satisfying any applicable
deductible or out-of-pocket and similar expense requirements under any welfare
plans that such employees are eligible to participate in after the Effective
Time.
(c) Parent and HoldCo agree that the Company shall honor, in accordance
with their respective terms and, on and after the Effective Time, Parent and
HoldCo shall cause the Surviving Corporation to honor, all written employment,
severance and similar agreements to which the Company is a party as of the
Effective Time, except to the extent that any such agreement was established,
entered into or amended in contravention of Section 6.01.
Section 6.15 Takeover Statute. If any "fair price," "moratorium," "control
share acquisition" or other antitakeover Law shall become applicable to the
transactions contemplated hereby, including any provision of the DGCL, or any
antitakeover provision contained in the Organizational Documents of the Company
or any of its Subsidiaries, each of the Parent Companies and the Company, and
the Supervisory Board and the Board of Management of Parent and the Boards of
Directors of the Company, HoldCo and Merger Sub shall grant such approvals and
take such actions as are necessary so that the transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to eliminate or minimize the effects of such Law on the
transactions contemplated hereby.
Section 6.16 Pooling-of-Interests; Tax Treatment.
(a) Each of the Parent Companies and the Company agrees that it shall not
take any action, or fail to take any action, which action or failure to act
could be reasonably likely to cause the Merger to fail to qualify (i) as a
"reorganization" within the meaning of Section 368(a) of the Code or (ii) for
pooling-of-interest business combination accounting treatment under Accounting
Principles Board Opinion No. 16.
(b) The Company shall use its reasonable best efforts to obtain (i) the tax
opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation, counsel
to the Company, referred to in Section 7.02(d) and (ii) the letter from Deloitte
& Touche LLP, its independent accountants, referred to in Section 7.03(e)(ii).
(c) Parent shall use its reasonable best efforts to obtain (i) the tax
opinion of Skadden, Arps, Slate, Meagher & Flom LLP, counsel to Parent, referred
to in Section 7.03(f); and (ii) the letter from Deloitte & Touche LLP, its
independent accountants, referred to in Section 7.03(e)(i).
(d) The Company, Parent, HoldCo and Merger Sub each agree that if the
conditions to Closing set forth in Sections 7.02(d) and 7.03(f) shall not be
satisfied because either Wilson Sonsini Goodrich & Rosati, Professional
Corporation, or Skadden, Arps, Slate, Meagher & Flom LLP, as applicable, is
unable to opine that the Merger shall be treated for Federal income Tax purposes
as a reorganization within the meaning of Section 368(a) of the Code as it is
currently structured, the parties will use reasonable best efforts to amend this
Agreement to restructure the proposed Merger as the merger of a direct, wholly
owned subsidiary of Parent with and into the Company in a transaction treated
for Federal income Tax purposes as a reorganization within the meaning of
Section 368(a)(1)(A) of the Code.
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(e) The parties agree that no amount paid or payable with respect to any
statutory appraisal rights will be paid or reimbursed by any of the Parent
Companies.
Section 6.17 Letters of Accountants. Parent and the Company shall use
their respective reasonable efforts to cause to be delivered to Parent letters
of Deloitte & Touche LLP, in its capacity as the Company's independent
accountants and Deloitte & Touche LLP, in its capacity as the Parent's
independent accountants, respectively, dated the date on which the Registration
Statement becomes effective and as of the date of the Company Stockholder
Meeting (and satisfactory in form and substance to Parent), that are customary
in form, scope and substance for letters delivered by independent public
accountants in connection with transactions such as those contemplated by this
Agreement and the Registration Statement.
Section 6.18 Series 1 Preferred Stock. As promptly as practicable after
the consummation of the Merger, the Surviving Corporation shall notify the
holders of outstanding shares of the Company Series 1 Preferred Stock that
pursuant to the terms of the Certificate of Designations of the Company Series 1
Preferred Stock (the "Certificate of Designations") (i) the consummation of the
Merger was deemed to be a liquidation of the Company and (ii) that each share of
Company Series 1 Preferred Stock outstanding immediately prior to the Merger was
automatically and without further action canceled, retired and ceased to exist
as of the Effective Time and thereafter represented only the right to receive
from Parent, upon surrender by the holder thereof to the Surviving Corporation
of the certificate representing such share, the number of Parent Ordinary Shares
that such holder would have been entitled to receive if such holder had
converted the shares represented by the surrendered certificates into shares of
Company Common Stock pursuant to the terms of the Certificate of Designations
and thereafter such shares had been converted in the Merger as set forth in
Section 3.01(c). Upon the surrender of any certificate representing shares of
Company Series 1 Preferred Stock, Parent shall promptly deliver to the holder of
such shares of Company Series 1 Preferred Stock the number of Parent Ordinary
Shares that such holder would have been entitled to receive if such holder had
converted the shares represented by the surrendered certificates into shares of
Company Common Stock pursuant to the terms of the Certificate of Designations
and thereafter such shares had been converted in the Merger as set forth in
Section 3.01(c).
Section 6.19 Employment Agreements. The Company agrees to cooperate with
Parent in its efforts to negotiate employment or other agreements with key
employees identified by Parent between the date hereof and the Effective Time.
Section 6.20 U.S. Operations. Parent acknowledges and agrees that it
intends to maintain a substantial presence in the United States to support
research, development, production and customer requirements for the Company's
lithography division.
ARTICLE VII
CONDITIONS TO THE MERGER
Section 7.01 Conditions to Each Party's Obligations to Effect the
Merger. The respective obligations of the Company and the Parent Companies to
consummate the Merger shall be subject to the fulfillment, at or prior to the
Effective Time, of the following conditions (any of which may be waived, to the
extent permitted by Law, in writing, in whole or in part, by the Company or the
Parent Companies):
(a) The Company Stockholder Approval shall have been obtained in
accordance with applicable Laws and the Organizational Documents of the
Company;
(b) There shall not be pending any action, suit or proceeding brought
by any Governmental Authority which challenges or seeks to enjoin the
Merger or the other transactions contemplated hereby. No court or other
Governmental Authority having jurisdiction over the Company or Parent, or
any of their respective Subsidiaries, shall have enacted, issued,
promulgated, enforced or entered any Law (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making the Merger
or any of the transactions contemplated hereby illegal;
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(c) Any applicable waiting period under the HSR Act and other
applicable Antitrust Laws, if any, shall have expired or been terminated
and all consents, approvals, orders or authorizations under Antitrust Laws,
if any, shall have been obtained;
(d) The Registration Statement shall have become effective under the
Securities Act and will not be the subject of any stop order or proceedings
seeking a stop order; and
(e) The Parent Ordinary Shares issuable to the Company's stockholders
as contemplated by this Agreement shall have been approved for listing on
the NASDAQ, subject to official notice of issuance.
Section 7.02 Conditions to Obligation of the Company to Effect the
Merger. The obligation of the Company to effect the Merger shall be subject to
the fulfillment, at or prior to the Effective Time, of the following additional
conditions (any of which may be waived, to the extent permitted by Law, in
writing, in whole or in part, by the Company):
(a) The representations and warranties of the Parent Companies
contained herein shall be true and correct in all respects (but without
regard to any materiality qualifications or references to Parent Material
Adverse Effect contained in any specific representation or warranty) as of
the Effective Time with the same effect as though made as of the Effective
Time, except (i) for changes specifically permitted by the terms of this
Agreement, (ii) that the accuracy of representations and warranties that by
their terms speak as of the date of this Agreement or some other date will
be determined as of such date and (iii) where any such failure of the
representations and warranties to be true and correct in the aggregate
could not reasonably be expected to have a Parent Material Adverse Effect;
(b) The Parent Companies shall have performed in all material respects
all obligations and shall have complied in all material respects with all
covenants required by this Agreement to be performed or complied with by
them prior to the Effective Time;
(c) Parent shall have delivered to the Company a certificate, dated
the Effective Time and signed by its Chief Executive Officer or Chief
Financial Officer, certifying as to the fulfillment of the conditions set
forth in subsections (a) and (b) of this Section 7.02; and
(d) The Company shall have received an opinion of Wilson Sonsini
Goodrich & Rosati, Professional Corporation, counsel to the Company, in
form and substance reasonably satisfactory to the Company, on the basis of
customary facts, representations and assumptions set forth in such opinion,
to the effect that the Merger shall be treated for Federal income Tax
purposes as a reorganization within the meaning of Section 368(a) of the
Code and that Parent, HoldCo and the Company will each be a party to the
reorganization within the meaning of Section 368(a) of the Code and Parent
will be treated as a corporation under Section 367(a) of the Code. In
rendering such opinion, Wilson Sonsini Goodrich & Rosati, Professional
Corporation, may require and rely upon representations and covenants
substantially in the form of those contained in Parent's and the Company's
officer's certificates attached hereto as Exhibits D and E, respectively.
Section 7.03 Conditions to Obligation of the Parent Companies to Effect the
Merger. The obligation of the Parent Companies to effect the Merger shall be
subject to the fulfillment, at or prior to the Effective Time, of the following
additional conditions (any of which may be waived, to the extent permitted by
Law, in writing, in whole or in part, by the Company):
(a) The representations and warranties of the Company contained herein
shall be true and correct in all respects (but without regard to any
materiality qualifications or references to Company Material Adverse Effect
contained in any specific representation or warranty) as of the Effective
Time with the same effect as though made as of the Effective Time, except
(i) for changes specifically permitted by the terms of this Agreement, (ii)
that the accuracy of representations and warranties that by their terms
speak as of the date of this Agreement or some other date will be
determined as of such date and (iii) where any such failure of the
representations and warranties to be true and
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correct in the aggregate could not reasonably be expected to have a Company
Material Adverse Effect;
(b) The Company shall have performed in all material respects all
obligations and shall have complied in all material respects with all
covenants required by this Agreement to be performed or complied with by it
prior to the Effective Time;
(c) The Company shall have delivered to Parent a certificate, dated
the Effective Time and signed by its Chief Executive Officer or Chief
Financial Officer, certifying as to the fulfillment of the conditions set
forth in clauses (a) and (b) of this Section 7.03;
(d) The letters from Rule 145/Pooling Affiliates required by Section
6.13 to be delivered by the Company's affiliates, shall have been
delivered;
(e) Parent shall have received a letter from (i) Deloitte & Touche
LLP, its independent accountants, stating that it is appropriate for Parent
to apply pooling-of-interest business combination accounting to the Merger
under Accounting Principles Board Opinion No. 16, if the Merger is
consummated in accordance with the terms of this Agreement, and (ii)
Deloitte & Touche LLP, the Company's independent accountants, stating that
it is appropriate for the Company to apply pooling-of-interest business
combination accounting to the Merger under Accounting Principles Board
Opinion No. 16, if the Merger is consummated in accordance with its terms;
and
(f) Parent shall have received an opinion of Skadden, Arps, Slate,
Meagher & Flom LLP, counsel to Parent, in form and substance reasonably
satisfactory to Parent, on the basis of customary facts, representations
and assumptions set forth in such opinion, to the effect that the Merger
shall be treated for Federal income Tax purposes as a reorganization within
the meaning of Section 368(a) of the Code and that Parent, HoldCo and the
Company will each be a party to the reorganization within the meaning of
Section 368(a) of the Code and Parent will be treated as a corporation
under Section 367(a) of the Code. In rendering such opinion, Skadden, Arps,
Slate, Meagher & Flom LLP may require and rely upon representations and
covenants substantially in the form of those contained in Parent's and the
Company's officer's certificates attached hereto as Exhibits D and E,
respectively.
ARTICLE VIII
TERMINATION AND ABANDONMENT
Section 8.01 Termination. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated and abandoned at any
time prior to the Effective Time, whether before or after the Company
Stockholder Approval:
(a) by the mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if (i) the Effective Time shall
not have occurred on or before June 30, 2001 and (ii) the party seeking to
terminate this Agreement pursuant to this clause 8.01(b) shall not have
breached in any material respect its obligations under this Agreement in
any manner that shall have contributed to the failure to consummate the
Merger on or before such date;
(c) by either the Company or Parent, if (i) a statute, rule,
regulation or executive order shall have been enacted, entered or
promulgated prohibiting the consummation of the Merger substantially on the
terms contemplated hereby or (ii) (A) an order, decree, ruling or
injunction shall have been entered permanently restraining, enjoining or
otherwise prohibiting the consummation of the Merger substantially on the
terms contemplated hereby and such order, decree, ruling or injunction
shall have become final and non-appealable and (B) the party seeking to
terminate this Agreement pursuant to this clause 8.01(c)(ii) shall have
used its reasonable best efforts to remove such order, decree, ruling or
injunction;
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(d) by either the Company or Parent, if the Company Stockholder
Approval shall not have been obtained by reason of the failure to obtain
the required vote at a duly held meeting of stockholders or of any
adjournment, postponement or continuation thereof;
(e) by Parent, if a Triggering Event shall have occurred; or
(f) by either the Company or Parent, if there shall have been a
material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement, which, if not cured,
would cause the conditions set forth in Section 7.02(a) or 7.03(a), as the
case may be, not to be satisfied, and such breach shall not have been cured
within 30 days after notice thereof shall have been received by the party
alleged to be in breach.
For purposes of this Agreement, a "Triggering Event" shall be deemed to
have occurred if: (i) the Board of Directors of the Company or any committee
thereof shall have recommended to the stockholders of the Company any Takeover
Proposal other than the transactions contemplated by this Agreement; (ii) the
Board of Directors of the Company or any committee thereof shall for any reason
have withdrawn or shall have amended or modified in a manner adverse to Parent
its Recommendation; (iii) the Company shall have failed to include the
Recommendation in the Proxy Statement or Registration Statement; or (iv) a
tender or exchange offer relating to 15% or more of the Shares shall have been
commenced by a Person unaffiliated with Parent, and Company shall not have sent
to its securityholders pursuant to Rule 14e-2 promulgated under the Exchange
Act, within 10 Business Days after such tender or exchange offer is first
published, sent or given, a statement recommending rejection of such tender or
exchange offer.
Section 8.02 Effect of Termination. In the event of termination of this
Agreement by Parent or the Company, as provided in Section 8.01, this Agreement
shall forthwith terminate and there shall be no liability hereunder on the part
of the Company or the Parent Companies or their respective officers or directors
(except as set forth in Section 6.03, this Section 8.02, Section 8.03 and
Article IX, which shall survive the termination); provided, however, that
nothing contained in this Section 8.02 or in Section 8.03 shall relieve any
party from any liability for any willful breach of this Agreement.
Section 8.03 Payment of Certain Fees.
(a) Notwithstanding any provision in this Agreement to the contrary, if
this Agreement is terminated by Parent in accordance with Section 8.01(e), then
the Company shall pay to Parent a termination fee in an amount equal to
$47,000,000 million (the "Termination Fee").
(b) If this Agreement is terminated by Parent or the Company pursuant to
Section 8.01(b) or 8.01(d) and within twelve (12) months of the date of such
termination a Third-Party Acquisition Event occurs, then the Company shall pay
to Parent the Termination Fee.
"Third-Party Acquisition Event" shall mean (i) the consummation of a
Takeover Proposal or that had been publicly announced prior to the termination
of this Agreement, or (ii) the entering into by the Company or any of its
Subsidiaries of a definitive agreement with respect to any such transaction;
provided, however, that for purposes of this Section 8.03 only, the percentage
thresholds in the definition of "Takeover Proposal" set forth in Section 6.05 of
this Agreement shall be changed from 15% to 40% (after giving effect to all
outstanding securities convertible into shares of Company Common Stock) in each
place such threshold appears.
(c) Any payment of the Termination Fee pursuant to (i) Section 8.03(a)
shall be made within one Business Day after termination of this Agreement (or as
otherwise expressly set forth in this Agreement) by wire transfer of immediately
available funds and (ii) Section 8.03(b) shall be made by wire transfer of
immediately available funds upon the earlier of (A) the consummation of a
Takeover Proposal or any transaction that, if it had been proposed prior to the
termination of this Agreement would have constituted a Takeover Proposal and (B)
the entering into by the Company or any of its Subsidiaries of a definitive
agreement with respect to any such transaction. If the Company fails to pay to
Parent any fee due hereunder (including the Termination Fee), the Company shall
pay the costs and expenses (including legal fees and expenses) in connection
with any action, including the filing of any lawsuit or other legal
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action, taken to collect payment, together with interest on the amount of any
unpaid fee and expense at the publicly announced prime rate of Citibank, N.A.
from the date such fee was required to be paid to the date it is paid.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Representations and Warranties. The respective
representations and warranties of the Company and the Parent Companies contained
herein or in any certificates or other documents delivered prior to or at the
Closing shall not be deemed waived or otherwise affected by any investigation
made by the other party. Each and every such representation and warranty shall
expire with, and be terminated and extinguished by, the consummation of the
Merger and from and after the Effective Time neither the Surviving Corporation
nor Parent or HoldCo shall be under any liability whatsoever with respect to any
such representation or warranty. This Section 9.01 shall have no effect upon any
other obligation of the parties, whether to be performed before or after the
Effective Time.
Section 9.02 Extension; Waiver. At any time prior to the Effective Time,
the parties, by action taken by or on behalf of the respective Boards of
Directors, or Board of Managers, as the case may be, of the Company, Parent,
HoldCo and Merger Sub may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained herein by any other applicable
party or in any document, certificate or writing delivered pursuant hereto by
any other applicable party or (c) waive compliance with any of the agreements or
conditions contained herein. Notwithstanding the foregoing, no failure or delay
by the Company or the Parent Companies in exercising any right hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise of any other right hereunder. Any
agreement on the part of any party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party.
Section 9.03 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered in person or
by a same-day or overnight commercial delivery service, or sent via facsimile
(receipt confirmed) as follows:
(a) if to the Company, to it at:
Silicon Valley Group, Inc.
101 Metro Drive, Suite 400
San Jose, CA 95110
Facsimile: (408) 888-1403
(408) 221-2155
Attention: Papken Der Torossian
Russell Weinstock
with a copy (which shall not constitute notice) to:
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Facsimile: (650) 493-6811
Attention: Larry W. Sonsini, Esq.
Aaron J. Alter, Esq.
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(b) if to the Parent Company, to it at:
ASM Lithography Holding N.V.
5503 LA Veldhoven
Veldhoven, the Netherlands
Facsimile: 011 31 40 230 3938
011 31 40 268 4888
Attention: Peter Wennink
Robert Roelofs
in each case, with a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP
One Rodney Square
Wilmington, Delaware 19801
Facsimile: (302) 651-3001
Attention: Robert B. Pincus, Esq.
or to such other Person or address facsimile number as any party shall specify
by notice in writing to each of the other parties. All such notices, requests,
demands, waivers and communications shall be deemed to have been received on the
date of delivery.
Section 9.04 Entire Agreement. This Agreement, the Confidentiality
Agreements and any other document delivered pursuant to the terms thereof
constitute the entire understanding of the parties with respect to the subject
matter contained herein and supersede all prior agreements and understandings,
oral and written, with respect thereto.
Section 9.05 Binding Effect; Benefit; Assignment. This Agreement shall
inure to the benefit of and be binding upon the parties. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned
(whether by operation of Law or otherwise) by any of the parties. Except as
provided in Section 6.10, nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties or their respective
successors and permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
Section 9.06 Amendment and Modification. This Agreement may be amended,
modified and supplemented in writing by the parties in any and all respects
before the Effective Time (notwithstanding the Company Stockholder Approval), by
action taken by the Board of Managers of Parent or the Boards of Directors of
the Company, HoldCo and Merger Sub or by the respective officers authorized by
such Board of Managers or Boards of Directors or otherwise, as the case may be;
provided, however, that after the Company Stockholder Approval, no amendment
shall be made which by Law requires further approval by the stockholders of the
Company without such further approval.
Section 9.07 Headings. The descriptive headings of the several Articles
and Sections of this Agreement are inserted for convenience only, do not
constitute a part of this Agreement and shall not affect in any way the meaning
or interpretation of this Agreement.
Section 9.08 Enforcement. The parties agree that money damages or other
remedy at law would not be a sufficient or adequate remedy for any breach or
violation of, or a default under, this Agreement by them and that in addition to
all other remedies available to them, each of them shall be entitled to the
fullest extent permitted by Law to an injunction restraining such breach,
violation or default or threatened breach, violation or default and to any other
equitable relief, including specific performance, without bond or other security
being required.
Section 9.09 Expenses. Whether or not the Merger is consummated, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses;
provided, however, Parent and the Company shall each pay 50% of all (i) filing
fees of the SEC and all costs and expenses (other than legal and accounting
costs and expenses) relating to the printing and mailing of the Proxy Statement
and the Registration Statement, and (ii) the filing fees
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under any applicable Antitrust Law. The Company shall pay any real property
transfer or similar Taxes imposed upon the stockholders of the Company in
connection with this Agreement and the transactions contemplated hereby.
Section 9.10 Counterparts; Effectiveness. This Agreement may be executed
in counterparts, each of which shall be deemed to be an original, and all of
which together shall be deemed to be one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered (by facsimile or otherwise) to the other parties.
Section 9.11 Applicable Law. This Agreement and the legal relations
between the parties shall be governed by and construed in accordance with the
Laws of the State of Delaware, without regard to the conflict of Laws rules
thereof.
Section 9.12 Severability. If any term, provision, covenant or restriction
contained in this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void, unenforceable or against its regulatory
policy, such term, provision, covenant or restriction shall, as to that
jurisdiction, be ineffective only to the extent of such invalidity or
unenforceability and the remainder of the terms, provisions, covenants and
restrictions contained in this Agreement shall remain in full force and effect
and shall in no way be affected, impaired or invalidated.
Section 9.13 Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
Section 9.14 No Strict Construction. Notwithstanding the fact that this
Agreement has been drafted or prepared by one of the parties, each of the
parties confirms that both it and its counsel have reviewed, negotiated and
adopted this Agreement as the joint agreement and understanding of the parties,
and the language used in this Agreement shall be deemed to be the language
chosen by the parties to express their mutual intent, and no rule of strict
construction shall be applied against any person. Accordingly, any rule of Law
or any legal decision that would require interpretation of any claimed ambiguity
in this Agreement against the party that drafted it has no application and is
expressly waived by each party.
Section 9.15 Forum Selection; Consent to Jurisdiction. All disputes
arising out of or in connection with this Agreement shall be solely and
exclusively resolved by a court of competent jurisdiction in the State of
Delaware. The parties hereby consent to the jurisdiction of the courts of the
State of Delaware and the United States District Court of the District of
Delaware and waive any objections or rights as to forum nonconveniens, lack of
personal jurisdiction or similar grounds with respect to any dispute relating to
this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, each of Parent and the Company has caused this
Agreement and Plan of Merger to be executed and delivered by its officers
thereunto duly authorized, all as of the date first above written.
ASM LITHOGRAPHY HOLDING N.V.
By: /s/ D.J. DUNN
---------------------------------------
Name: D.J. Dunn
Title: Chief Executive Officer
SILICON VALLEY GROUP, INC.
By: /s/ PAPKEN S. DER TOROSSIAN
---------------------------------------
Name: Papken S. Der Torossian
Title: Chief Executive Officer
ALMA HOLDING, INC.
By: /s/ P.T.F.M. WENNINK
---------------------------------------
Name: P.T.F.M. Wennink
Title: Vice President and Chief
Financial Officer
ALMA (MERGER), INC.
By: /s/ R. F. ROELOFS
---------------------------------------
Name: R.F. Roelofs
Title: General Counsel
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ANNEX B
ANNEX B -- OPINION OF CREDIT SUISSE FIRST BOSTON CORPORATION
[LETTERHEAD OF CREDIT SUISSE FIRST BOSTON CORPORATION]
October 1, 2000
Board of Directors
Silicon Valley Group, Inc.
101 Metro Drive
Suite 400
San Jose, California 95110
Members of the Board:
You have asked us to advise you with respect to the fairness, from a
financial point of view, to the holders of Silicon Valley Group Common Stock (as
defined below) of the Exchange Ratio (as defined below) set forth in the
Agreement and Plan of Merger, dated as of October 1, 2000 (the "Agreement"), by
and among ASM Lithography Holding N.V. ("ASM Lithography"), ALMA Holding, Inc.,
a wholly owned subsidiary of ASM Lithography ("HoldCo"), ALMA (Merger), Inc., a
wholly owned subsidiary of HoldCo ("Merger Sub"), and Silicon Valley Group, Inc.
("Silicon Valley Group"). The Agreement provides for, among other things, the
merger of Merger Sub with Silicon Valley Group (the "Merger") pursuant to which
each outstanding share of the common stock, par value $0.01 per share, of
Silicon Valley Group ("Silicon Valley Group Common Stock") will be converted
into the right to receive 1.286 (the "Exchange Ratio") ordinary shares, par
value EUR 0.02 per share, of ASM Lithography ("ASM Lithography Ordinary
Shares").
In arriving at our opinion, we have reviewed the Merger Agreement, as well
as certain publicly available business and financial information relating to
Silicon Valley Group and ASM Lithography. We also have reviewed certain other
information relating to Silicon Valley Group and ASM Lithography, including
financial forecasts, provided to or discussed with us by Silicon Valley Group
and ASM Lithography, and have met with the managements of Silicon Valley Group
and ASM Lithography to discuss the businesses and prospects of Silicon Valley
Group and ASM Lithography. We also have considered certain financial and stock
market data of Silicon Valley Group and ASM Lithography, and we have compared
those data with similar data for other publicly held companies in businesses we
deemed similar to those of Silicon Valley Group and ASM Lithography, and we have
considered, to the extent publicly available, the financial terms of certain
other business combinations and other transactions which have recently been
effected. We also considered such other information, financial studies, analyses
and investigations and financial, economic and market criteria which we deemed
relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information and have relied on
its being complete and accurate in all material respects.
With respect to the financial forecasts relating to Silicon Valley Group
and ASM Lithography, we have been advised, and have assumed, that such forecasts
have been reasonably prepared on bases reflecting the best currently available
estimates and judgments of the managements of Silicon Valley Group and ASM
Lithography as to the future financial performance of Silicon Valley Group and
ASM Lithography. In addition, we have relied, without independent verification,
upon the assessments of the
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managements of Silicon Valley Group and ASM Lithography as to (i) the existing
and future technology and products of Silicon Valley Group and ASM Lithography
and the risks associated with such technology and products and (ii) their
ability to integrate the businesses of Silicon Valley Group and ASM Lithography.
We also have assumed, with your consent, that the Merger will be treated as a
tax-free reorganization for federal income tax purposes and as a pooling of
interests in accordance with generally accepted accounting principles. In
addition, we have not been requested to make, and have not made, an independent
evaluation or appraisal of the assets or liabilities (contingent or otherwise)
of Silicon Valley Group and ASM Lithography, nor have we been furnished with any
such evaluations or appraisals. Our opinion is necessarily based upon financial,
economic, market and other conditions as they exist and can be evaluated on the
date hereof. We are not expressing any opinion as to what the value of ASM
Lithography Ordinary Shares actually will be when issued pursuant to the Merger
or the prices at which ASM Lithography Ordinary Shares will trade subsequent to
the Merger.
We have acted as financial advisor to Silicon Valley Group in connection
with the Merger and will receive a fee for our services, a significant portion
of which is contingent upon the consummation of the Merger. We also will receive
a fee for rendering this opinion. We and our affiliates in the past have
provided financial services to Silicon Valley Group and ASM Lithography
unrelated to the proposed Merger, for which services we have received
compensation. In the ordinary course of business, we and our affiliates may
actively trade the debt and equity securities of Silicon Valley Group and ASM
Lithography for our own and such affiliates' accounts and for the accounts of
customers and, accordingly, may at any time hold a long or short position in
such securities.
It is understood that this letter is for the information of the Board of
Directors of Silicon Valley Group in connection with its evaluation of the
Merger and does not constitute a recommendation to any stockholder as to how
such stockholder should vote or act with respect to any matter relating to the
Merger.
Based upon and subject to the foregoing, it is our opinion that, as of the
date hereof, the Exchange Ratio is fair, from a financial point of view, to the
holders of Silicon Valley Group Common Stock.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
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ANNEX C
ANNEX C -- SECTION 262 OF THE DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS. (a) Any stockholder of a corporation of this State
who holds shares of stock on the date of the making of a demand pursuant to
subsection (d) of this section with respect to such shares, who continuously
holds such shares through the effective date of the merger or consolidation, who
has otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in writing
pursuant to sec. 228 of this title shall be entitled to an appraisal by the
Court of Chancery of the fair value of the stockholder's shares of stock under
the circumstances described in subsections (b) and (c) of this section. As used
in this section, the word "stockholder" means a holder of record of stock in a
stock corporation and also a member of record of a nonstock corporation; the
words "stock" and "share" mean and include what is ordinarily meant by those
words and also membership or membership interest of a member of a nonstock
corporation; and the words "depository receipt" mean a receipt or other
instrument issued by a depository representing an interest in one or more
shares, or fractions thereof, solely of stock of a corporation, which stock is
deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to sec. 251 (other than a merger effected pursuant to sec.
251(g) of this title), sec. 252, sec. 254, sec. 257, sec. 258, sec. 263, or sec.
264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer quotation
system by the National Association of Securities Dealers, Inc. or (ii) held
of record by more than 2,000 holders; and further provided that no
appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the stockholders of the surviving corporation
as provided in subsection (f) of sec. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or series
of stock of a constituent corporation if the holders thereof are required
by the terms of an agreement of merger or consolidation pursuant to
sections 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock or depository receipts at the
effective date of the merger or consolidation will be either listed on a
national securities exchange or designated as a national market system
security on an interdealer quotation system by the National Association
of Securities Dealers, Inc. or held of record by more than 2,000
holders;
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
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(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under sec. 253 of this title is not owned by the
parent corporation immediately prior to the merger, appraisal rights shall
be available for the shares of the subsidiary Delaware corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsections (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares. Such
demand will be sufficient if it reasonably informs the corporation of the
identity of the stockholder and that the stockholder intends thereby to
demand the appraisal of his shares. A proxy or vote against the merger or
consolidation shall not constitute such a demand. A stockholder electing to
take such action must do so by a separate written demand as herein
provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to sec. 228
or sec. 253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal rights
of the approval of the merger or consolidation and that appraisal rights
are available for any or all shares of such class or series of stock of
such constituent corporation, and shall include in such notice a copy of
this section; provided that, if the notice is given on or after the
effective date of the merger or consolidation, such notice shall be given
by the surviving or resulting corporation to all such holders of any class
or series of stock of a constituent corporation that are entitled to
appraisal rights. Such notice may, and, if given on or after the effective
date of the merger or consolidation, shall, also notify such stockholders
of the effective date of the merger or consolidation. Any stockholder
entitled to appraisal rights may, within 20 days after the date of mailing
of such notice, demand in writing from the surviving or resulting
corporation the appraisal of such holder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation, either
(i) each such constituent corporation shall send a second notice before the
effective date of the merger or consolidation notifying each of the holders
of any class or series of stock of such constituent corporation that are
entitled to appraisal rights of the effective date of the merger or
consolidation or (ii) the surviving or resulting corporation shall send
such a second notice to all such holders on or within 10 days after such
effective date; provided, however, that if such second notice is sent more
than 20 days following the sending of the first notice, such second notice
need only be sent to each stockholder who is entitled to appraisal rights
and who has demanded appraisal of such holder's shares in accordance with
this subsection. An affidavit of the secretary or assistant secretary or of
the transfer agent of the corporation that is required to give either
notice that such notice has been given shall, in the absence of fraud, be
prima facie evidence of the facts stated
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therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record
date that shall be not more than 10 days prior to the date the notice is
given, provided, that if the notice is given on or after the effective date
of the merger or consolidation, the record date shall be such effective
date. If no record date is fixed and the notice is given prior to the
effective date, the record date shall be the close of business on the day
next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder who has complied with the requirements of
subsections (a) and (d) hereof, upon written request, shall be entitled to
receive from the corporation surviving the merger or resulting from the
consolidation a statement setting forth the aggregate number of shares not voted
in favor of the merger or consolidation and with respect to which demands for
appraisal have been received and the aggregate number of holders of such shares.
Such written statement shall be mailed to the stockholder within 10 days after
his written request for such a statement is received by the surviving or
resulting corporation or within 10 days after expiration of the period for
delivery of demands for appraisal under subsection (d) hereof, whichever is
later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has
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submitted his certificates of stock to the Register in Chancery, if such is
required, may participate fully in all proceedings until it is finally
determined that he is not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger or consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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[SVG LOGO]
SILICON VALLEY GROUP, INC.
SPECIAL MEETING
FEBRUARY 7, 2001
10:00 A.M. PACIFIC STANDARD TIME
2240 RINGWOOD AVENUE
SAN JOSE, CALIFORNIA 95131
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SILICON
VALLEY GROUP, INC. FOR THE SPECIAL MEETING OF STOCKHOLDERS ON FEBRUARY 7, 2001.
The undersigned appoints Papken S. Der Torossian and Russell G. Weinstock,
and either of them, the proxies of the undersigned, with full power of
substitution in each, to vote at the Special Meeting of Stockholders to be held
on February 7, 2001 and at any adjournment or postponement thereof all of the
undersigned's shares of Silicon Valley Group, Inc. common stock held of record
on December 20, 2000 in the manner indicated on the reverse side hereof, and
with the discretionary authority to vote as to any other matters that may
properly come before such meeting.
IMPORTANT -- THIS PROXY IS CONTINUED ON THE REVERSE SIDE.
PLEASE SIGN AND DATE ON THE REVERSE SIDE AND RETURN TODAY.
- DETACH PROXY CARD HERE -
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THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED IN THE MANNER DIRECTED. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR THE PROPOSAL.
To vote, please mark, sign, date and return this Proxy in the enclosed
postage-paid envelope.
(Continued, and to be signed and dated on the reverse side)
SILICON VALLEY GROUP, INC.
101 METRO DRIVE, SUITE 400
SAN JOSE, CALIFORNIA 95110
Proxy Card 1
<PAGE> 165
[X] PLEASE MARK VOTE IN BOX AS IN THIS EXAMPLE, USING DARK INK ONLY.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" EACH OF THE ITEMS BELOW.
<TABLE>
<S> <C> <C> <C> <C>
1 Adoption of the Agreement and Plan of Merger, FOR [ ] AGAINST [ ] WITHHELD [ ]
dated as of October 1, 2000, by and among ASM
Lithography Holding N.V., ALMA Holding, Inc.,
ALMA (Merger), Inc. and Silicon Valley Group,
Inc.
2 To adjourn the meeting, if necessary, to FOR [ ] AGAINST [ ] WITHHELD [ ]
solicit additional proxies to adopt the
Agreement and Plan of Merger, dated as of
October 1, 2000, by and among ASM Lithography
Holding N.V., ALMA Holding, Inc., ALMA
(Merger), Inc. and Silicon Valley Group, Inc.
</TABLE>
In their discretion, the Proxies are authorized to vote
upon such other business as may properly come before the
meeting.
Dated: ________________________, ______
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SIGNATURE(S)
PLEASE SIGN EXACTLY AS NAME APPEARS HEREON. JOINT OWNERS
SHOULD EACH SIGN. WHEN SIGNING AS AN EXECUTOR, CORPORATE
OFFICER OR IN ANY OTHER REPRESENTATIVE CAPACITY, PLEASE
GIVE FULL TITLE AS SUCH.
(Please sign, date and return this proxy card in the enclosed envelope.)
Proxy Card 2
